Mastering the Commodities Markets
A step-by-step guide to the markets, products and their trading
The Mastering Series

• Covers all the major commodity markets, their products, applications and risks
• Learn how to invest, hedge and trade in the related physical, equities and derivatives markets

Commodities such as oil and gas, food and water, solar and wind power, metals and minerals, animals and fish have become a genuine asset class alongside bonds, equities, and foreign exchange.

Mastering the Commodities Markets is an introduction to both the general commodity markets and to specific products: precious metals, oil and other hydrocarbons, rare earth elements, aqua and agriculture, alternative energy and carbon and environmental commodities. Beginning with the basics of commodities and how they have developed as an asset class in their own right, the book then introduces key commodities chapter by chapter, looking at the background and context of each product, their origins and manufacture, key market participants, pricing structures and patterns, risks and how to trade, hedge and use indices.

Mastering Commodities Markets includes: 

• Commodity prices and their effect on financial markets
• Financial and non-financial market participants
• Economics of commodities, pricing mechanics and markets
• Trading, hedging, arbitrage and investing
• Commodity Indices

Acknowledgements

Contributors

1 Commodity Fundamentals

Commodities are an asset class in their own right

Range of commodity investments

Market developments and global drivers

Commodity prices and their effect on financial markets

Market participants

How commodities differ from other assets

Economics of commodities: spot and forward transactions

Forward curves: contango and backwardation

Understanding the ‘basis’

Commodity trading, hedging, arbitrage

Commodity indices

2 Key Commodity Derivatives

Background and context

Market Fundamentals

Market fundamentals: exchange traded v. OTC derivatives markets 

The major commodities exchanges

Exchange traded futures

Exchange traded options

OTC commodities derivatives

OTC commodities options (caps)

OTC commodities swaps

Regulatory reform

3 Oil

Steve McBain

Background and context

Crude oil production

Crude oil consumption

Crude oil refining

Geopolitics

OPEC

Definitions and key features

Oil reserves

Oil uses and applications

Oil pricing and price discovery

Freighting

Hedging and risk management

Environmental concerns

Future market developments

4 Gas

With featured section on natural gas trading, by Victoria Adams

Background and context

What is natural gas?

Gas measurements

Natural gas formation

Natural gas reserves

Natural gas producers

Liquefied natural gas (LNG)

Shale gas

Gas pricing and price discovery

Trading natural gas

‘Prompt’ and ‘curve’ markets

Spot trading and balancing

Exchange trading

5 Coal

Background and context

Range of coals

Mining and production

World production and reserves

Coal pricing and price discovery

Exchange traded markets

Trading with coal futures

Environmental concerns

Coal and carbon issues

6 Alternative Energy

Background and context

Measurements of electricity

Energy definitions

Hydropower

Wind power

Solar power

Biofuels

Geothermal power

7 Carbon and Environmental Commodities

Andrew Pisano

Background and context

Economics of climate change

An overview of emissions trading

Emissions trading schemes

Pricing and price discovery – supply and demand

Hedging and trading

The future of emissions trading

8 Precious Metals

Jeffrey Rhodes

Introduction – a personal view

Background and context: London Bullion Market

Bullion accounts

Supply and demand

Producers and consumers

Pricing and price discovery

Hedging and trading instruments

Technical analysis

Glossary of terms for bullion markets

9 Base Metals

Fabrice Tayot

Background and context

The mining lifecycle

Rehabilitation and environmental concerns

Characteristics, supply and demand of key base metals:

Pricing and price discovery

Risk management and derivatives

Outlook

10 Rare Earth Elements

Background and context

Definition and key features

Supply and demand

World production and reserves

Importance of China

Importance of rare earth elements in today’s markets

Defence uses of rare earth elements<

Francesca Taylor has a B.Sc in Geology from London University and has been active in the commodity, currency and derivatives markets for many years. She is a well-established and published author

Francesca has a talent for simplifying the complex and the complicated. She is the founder and ex-CEO of Taylor Associates (International) and is Managing Partner of the Matrix Partnership. Now based in the Middle East (Dubai) she is at the heart of the global oil and gas markets and has close ties with commodity traders and commodity asset managers. In addition she has worked closely with the Dubai Mercantile Exchange (DME) where the Oman crude oil contract is traded and has a wide reaching and broad group of contacts.

Francesca is the author of Mastering Derivatives Markets (now in its 4^th edition), Mastering Foreign Exchange and Currency Options and Market Know How: Finance and Markets