10 Best Commodity Trading Brokers for 2023

A “commodity trading broker” is a brokerage firm that provides traders and investors with a platform to buy and sell commodities and commodity derivatives.

Commodity trading brokers are also often referred to as “commodity trading platforms”.

Commodities refer to basic goods used in commerce that are interchangeable with other goods of the same type, such as agricultural products (like wheat, corn, soybeans), energy resources (like oil, natural gas), and precious metals (like gold, silver).

Commodity derivatives are financial instruments whose value is derived from the price of an underlying commodity. These include futures, options, and Contract For Differences (CFDs).

In this top ten you will find commodity trading platforms mainly for CFD trading.

These kinds of products are divided into three different types:

• Hard Commodities: This includes gold, silver, copper, platinum, palladium;
• Soft Commodities: This includes common agricultural products including wheat, corn, sugar, coffee, soybeans, and generally what grows;
• Energies: This includes crude oil, heating oil, and natural gas.

Round-up

Below is a comparison of the broker’s minimum spreads and the total number of commodity assets offered:

What are the best brokers and platforms for commodity trading?

Below our curated list of the best brokers and platforms for commodity trading, with features and characteristics.

How to choose a commodity broker

Choosing the right commodity broker is vital to your success in commodity trading. Here’s what you should look out for:

1. Look for a regulated commodity broker: Always opt for a broker regulated by a reputable regulatory body, such as NFA (National Futures Associations), FCA (Financial Conduct Authority) or ASIC (Australian Securities and Investments Commission) to name a few. This ensures the broker operates under the stringent regulations that protect your investment. These include data protection policies, security protocols, and financial transparency.
2. Prefer low commission brokers: Lower commission rates can greatly impact your returns in the long run. However, keep in mind that low-cost brokers might not offer the same level of service or resources as those charging a higher commission. Nowadays there are multiple brokers on the market that offer low fees on gold, such as 1.5 pips or lower when trading the commodity as CFD, or 1$/contract when gold is traded as options and futures.
3. Check the type of commodity broker: Different brokers specialize in different commodities and offer varying types of commodity derivatives. If you’re interested in a specific derivative type, ensure your chosen broker provides it. For instance, if you’re into agricultural commodities, choose a broker that specializes in this area.

What are the most traded commodities?

As per 2021 data, the top traded commodities were:

• WTI Crude Oil: With 248 million contracts, it is the most traded commodity. The popularity stems from its ubiquitous use in various industries.
• Natural Gas: This saw 97 million contracts traded, reflecting its increasing importance in the global energy market.
• Corn: It racked up 86 million contracts, signifying its essential role in both the food industry and biofuel production.
• Gold: Despite being fourth on the list with 58 million contracts, gold remains a top choice for traders due to its status as a safe-haven asset.
• Soybean: This rounded up the top five with 53 million contracts, thanks to its diverse applications in food, feed, and industrial use.

What are the exchanges where commodity are traded the most?

Commodities are traded in exchanges that specialize in certain types of commodities. Here are some of the major exchanges where commodities are traded the most:

• Chicago Mercantile Exchange (CME) Group: The CME Group, incorporating the Chicago Mercantile Exchange and the Chicago Board of Trade (CBOT), is the largest commodities futures exchange in the world. It trades a wide variety of commodities, from agricultural products to energy and metals.
• New York Mercantile Exchange (NYMEX): Now a part of the CME Group, NYMEX is primarily known for trading energy products, particularly crude oil, heating oil, and natural gas.
• Intercontinental Exchange (ICE): Headquartered in Atlanta, ICE operates global exchanges and clearing houses, and provides information and connectivity services. Its most well-known commodity contract is the Brent Crude futures contract.
• London Metal Exchange (LME): The LME is the world’s leading exchange for non-ferrous metals trading, including aluminum, copper, and zinc.
• Dalian Commodity Exchange (DCE): This is one of the major commodity exchanges in China, trading in commodities like soybeans, corn, and steel.
• Multi Commodity Exchange of India (MCX): The MCX is India’s largest commodity futures exchange and ranks among the top global commodity exchanges in terms of the number of futures contracts traded. It offers futures trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities.

How to trade commodities

Commodity trading can take place in several ways:

• Spot Market: In this market, commodities are traded at their current price for immediate delivery. Physical commodity trading typically takes place in the spot market.
• Futures Market: Here, commodities are bought and sold through contracts that specify the future price of the commodity. These are essentially agreements to buy or sell a specific quantity of a commodity at a predetermined price and time.
• CFD Market: Contract for Difference (CFD) allows traders to speculate (also with leverage) on the price of commodities without owning the actual commodity. You can make a profit by correctly predicting whether the price will rise or fall.
• Options Market: Similar to the futures market, the options market operates based on future pricing, but traders have the option (not obligation) to buy or sell the commodity at the agreed price on the due date.

Pros and cons of commodity brokers

Pros

• Wide Range of Tradable Assets
• Flexible Trading Environment

Cons

• Limited Commodities
• Costs and Fees