Realities of the market. How the soft commodities market works today?

The trade in agricultural commodities dates back thousands of years, making it the oldest financial market in the world. But with prices intimately tied to weather patterns, supply and demand, and a wealth of other factors, there are always new opportunities for traders. Over the last 63 years, the average returns on the agricultural commodities market have been significantly higher than the global inflation rate. According to the reports of EU Committee of Agriculture and Rural Development and the USDA WASDE the annual volume of world trade of the main agricultural products is estimated to be 800 million tons or an equivalent of more than 300 billion US dollars.

At the same time, the volume of agricultural products trade in the Black Sea region is more than 100 million tons and equaling 35 billion US dollars which make 13.2% of world trade share.

At the same time only 14 countries, including the countries of the Black Sea region provide almost 85 % of the world turnover:

Over the past 10 years, there has been a rapid growth of trade and export volume on the soft commodities market. During this period, world exports of wheat and corn increased by more than 36%. The volume of soybean exports increased by 77%.

Currently all commodity exchanges such as CME, MATIF, BOCE etc. have moved away from physical trading towards trading of derivatives, forwards, spreads, indices and are used primarily for hedging of risks.

This created a huge disbalance and confusion on the global market of physical trading as well as all other accompanying markets.

All of the above leads to a logical conclusion.

The global market of soft commodities needs a solid marketplace for the physical trading of soft commodities.

Ukraine and the Black Sea region are those windows to the global market that will allow a digital solution launched in these regions immediately pick up traction worldwide.

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