Agriculture is an occupation that brings a high amount of revenue to any country and helps many households to fulfill the basic necessities. The two people that benefit the most out of this occupation are the farmer and the agricultural commodities trader.
Are you looking to start your own business in this field and are pretty confused as to which agricultural commodity is the most profitable? Do not worry as we have listed out the top 5 agricultural commodities that one can trade in order to earn high revenues. All the other aspects of trading have also been explained in this article, so make sure you read it thoroughly and understand the concepts clearly. Put on your reading glass and a cup of coffee and explore the world of trading.
What Are Agricultural Commodities?
Before we start mentioning the top 5 commodities, it is important to understand the meaning of agricultural commodities. An agricultural commodity consists of any animal or crop grown or raised on farmland. The items may vary from grains to livestock and may also include dairy products such as milk and eggs.
Agricultural commodities are seen as non-processed products that are available for human or animal consumption only. But most agricultural products provide essential food and food ingredients to the world and hence they also include non-food products essential to industrial and manufacturing sectors. For instance, trees that are grown on plantations are used as timber. It is an essential material for everything ranging from construction to furniture manufacturing. People use many products such as latex from rubber trees, wool from sheep, in various industries. Some plant crops like chamomile are grown both for making tea and as organic ingredients in skin and hair care products. Also. people use herbs like lavender for aromatic purposes or as an oil for incense and candle making. The list is never ending….
Why Are They Important?
After understanding the meaning, let us move on to why agricultural commodities are important. Commodities flourish or diminish based on the demand from the public. One great thing about agricultural commodities is that they help in feeding billions of people around the globe. Without the agricultural commodities, the world would not be able to survive. All of this means that trading agricultural commodities is both a positive thing to do for our fellow people and a lucrative, high-demand endeavor.
On top of feeding the world, a staggering population involves in farming these agricultural commodities. If we do not trade in agricultural products, there would not be enough food to feed humanity and many would no longer have employment. This would consequently lead to starvation and poverty. Trading in agricultural commodities is a win-win situation as you can feed and employ people while growing your finance at the same time. This will also help you to contribute to the economy of your country.
What Is The Agricultural Commodities Index?
The next important term to understand is the meaning of commodities index. It is a collection of commodities that trade via trading exchanges. Each index corporates an abundance of related products. The relative value of these products computes by averaging a selection of the products and their performance in the market. The overall performance of the index shows the financial health of any market. This resulting figure helps the investors to decide whether to invest in stock within that index or not.
An investor simplifies the investment process by using an index and being able to invest in an entire market. For instance, there are many agricultural indexes and each one covers several related products. An investor could look at the performance of the Butter index and see that butter is in a healthy position. They would then decide to invest in the whole market.
Investors are able to conduct the trading process easily by using an index of similar agricultural commodities.
Top 5 Most Profitable Agricultural Commodities
Cereals like barley, maize, oats, wheat, etc. are quite profitable around the world. So one can definitely invest in any of these grains and earn profit.
People consume vegetables in a high quantity in many countries like India, Canada, China, the United States, and many more. They produce it largely in these countries, so one who is looking for investing in agricultural commodities can look out for vegetables like lettuce, chickpea, cauliflower, eggplant, potato, spinach, etc.
In order to increase our immunity, people are constantly looking for healthy options and one such category is the fruits category. A variety of fruits grow and consume in different parts of the world. So you can try investing in this category.
Dairy ingredients like milk are produced in many countries. For instance, India, the United States, Turkey, and Kenya are some of the leading countries that have a high production of milk.
Milk, tea, coffee, wine, and beer are some of the beverages that are produced in many countries around the world and they are one of the leading industries. So trading in these commodities can be quite beneficial.
Factors Influencing Agro Commodities
The factors that influence agro commodities include-
- Disposable income (income left for spending on goods and services or for savings after tax reduces).
- Consumers taste and preferences
- Substitutes and other products
The Bottom Line
Agricultural commodities are highly in demand. So if you are looking to start your own business in this field or want to invest in the above-mentioned agricultural commodities, you need to do a thorough research and understand the various elements related to it.
One such company that works in the field of trading agricultural commodities and is an import and export trading firm is PL Global. The company is situated in Singapore and working in the trading industry with more than 80 years of experience. With its wide distribution network and skilled employees, the company revolves around the core idea of bringing the world together by dispersing the commodities around the world. You can trade good quality agricultural commodities at affordable prices with PL Global Impex Pvt. Ltd.