Supply, Demand & Global Cycles

What this unit covers

Understand why commodity prices move on physical supply and demand, a harvest, a mine closure, a war, in a way that is different from what moves a stock price.

By the end you will be able to

• Explain why commodity prices move on real-world physical supply and demand, not company news.
• Distinguish a price reflecting a company's future promise from one reflecting a physical thing's present supply.
• Identify supply shocks and demand shifts as forces that move commodity prices.

How it starts: Two Prices, Same Week

1. A company's stock falls sharply after it reports weaker earnings.
2. That same week, wheat prices rise with no company and no announcement.
3. If both are just markets moving, what actually moved the second one?

Words you will meet

Commodity

A physical, tangible good such as wheat, oil or copper that is grown, mined or extracted.

Supply

How much of a good actually exists and is available right now.

Demand

How much of a good people or industries want or need right now.

Supply shock

A sudden event, such as a failed harvest or a mine closure, that shrinks available supply.

In this module: Commodity Markets

1. What Are Commodities?
2. Energy, Metals & Agricultural Commodities
3. Supply, Demand & Global Cycles (this unit)
4. Understanding MCX & Commodity Trading Basics