For the assignment due Friday, you will be researching and analyzing a specific commodity. Essentially, you will be compiling a report to be shared and discussed with classmates.
Step 1: Create a Google Document that will be shared with me and other classmates on Friday. If you are not here on Friday, make sure to share your completed version by the end of class on Friday. (We will have the computers on Friday).
Step 2: Terms
Label a section in your document: Important terms.
To proceed, you will need to figure out what a future is. Futures are the most traded and analyzed portion of most commodity markets. The link provides a fairly in depth discussion of what a future is. In your own words (2-3 sentences), explain what a Future is.
Then, using your own knowledge, the textbook, or the internet, define what a Commodity is.
Step 3: I will be walking around assigning different commodities and checking your progress. Once you have a commodity, find out the following for it in a section labeled Background Information
-What is the product used for? Of course, there are many uses. Mention the ones you think are the most important and/or interesting.
-What countries or areas of the world are the main suppliers of this commodity?
Step 4: Researching the Market
Here's the "fun" part. Go to the CNBC Commodity Page.
Find your commodity and click on it. You will see a lot of information for the commodity. Create a Report in which you discuss the following:
-How many futures are being traded daily? (this is referred to as "volume.")
-What has been the overall trend in the price of this commodity this year? This month? This week?
Step 5: Analysis
Label the next section Analysis. In this section, imagine that you are giving advice to an investor on if they should buy futures of this commodity. Explain why the should or should not buy futures.
Step 6: Implications
Label the next section Implications. In this section, imagine that you are giving advice to a developing (LDC) country about if they should begin to produce this commodity. Explain why the should or should not enter this market as suppliers.
Step 7: Conclusions
Label the last section Conclusions. Answer the following:
-Are commodities Demand elastic or inelastic? Why?
-Are commodities Supply elastic or inelastic? Why?
-Are commodities income elastic for demand or income inelastic for demand?
-What are the benefits of investing in commodity futures?
-What are the costs or risks of investing in commodity futures?
-As a producer what are the benefits and the costs of producing commodities.
-What are the benefits and costs for developing countries producing commodities for international sale?
Step 8: Rename your document with your name and Commodity.
Example: Mr. da Silva, Coal.
