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As with any spread bet, trading on commodities follows the same principles. The only real difference with spread betting commodities is that the months quoted do not normally follow the more traditional quarterly cycle, ie March, June, September and December followed by the financial contracts such as stock indexes and Bonds.

The other difference that should be noted with commodity spread bets such as Coffee or Wheat is what they call 'old crop' and 'new crop'. With contracts that are grown and harvested you will find two separate markets within the same complex due to the current year's crop and next year's. In situations like this there is obviously the potential for the prices and volatility to differ dramatically.

So whereas with spread bets on financial instruments there will normally be only one contract trading, say March, with commodity spread bets there are often 2 or more contracts that are actively traded. Information like this should be researched before trading.

Commodities that are physically delivered can often create exciting speculation potential. There is never a finite amount of any commodity to easily deliver at short notice, and large price movements can also occur due to shortages or gluts, which cannot be resolved in the short term.

Common Commodity Spread Bets