There are a very large number of agricultural commodities. For the purpose of this tutorial, we will concentrate on the most actively traded commodities in each of the three main agricultural commodities groups – grains, meats, and softs.

All these markets are characterized by strong supply and demand fundamentals, particularly from the demand side, as supply is usually constrained by long-term production cycles. In recent years, short-term changes from weather and disease have become less critical to supply (although these can still have a strong effect on occasions). This is due to the increased diversity of geographical sources of supply.

Our focus in this tutorial will be on those markets where at least one liquid and successful futures market exists, usually in the United States, which historically has dominated either the production or consumption (or both) of agricultural commodities.

Objectives
On completion you should be able to:

• Explain the supply and demand fundamentals for the main agricultural commodities within each of the following sectors: grains, livestock and meat, and softs
• Describe the process of hedging and trading in the agricultural commodities market