Agricultural Commodity Systems Lecture PDF

ISABELA STATE UNIVERSITY College of Agricultural Sciences and Technology AGRICULTURAL COMMODITY SYSTEMS Lucky Andrei D. Bautista AGRI 3111 | BSA 3 AGRICULTURAL COMMODITIES AND ITS EXAMPLES  AGRICULTURAL COMMODITIES AND ITS...

ISABELA STATE UNIVERSITY College of Agricultural Sciences and Technology AGRICULTURAL COMMODITY SYSTEMS Lucky Andrei D. Bautista AGRI 3111 | BSA 3 AGRICULTURAL COMMODITIES AND ITS EXAMPLES  AGRICULTURAL COMMODITIES AND ITS EXAMPLES Agricultural commodities include staple crops and animals produced on farms or plantations.  AGRICULTURAL COMMODITIES AND ITS EXAMPLES These commodities can serve as food for humans, feed for livestock, industrial inputs, or a combination of these uses. CHARACTERISTICS OF AGRICULTURAL COMMODITIES CHARACTERISTICS OF AGRICULTURAL COMMODITIES INTERCHANGEABILITY Commodities are interchangeable with other goods from the same group. CHARACTERISTICS OF AGRICULTURAL COMMODITIES UNIFORM QUALITY Commodities in the same group and quality grade are very similar. CHARACTERISTICS OF AGRICULTURAL PRODUCTS  CHARACTERISTICS OF AGRICULTURAL PRODUCTS RAW MATERIAL Agricultural products are considered raw materials because they are used for further processing.  CHARACTERISTICS OF AGRICULTURAL PRODUCTS BULKY AND PERISHABLE Agricultural commodities are bulky and perishable, requiring quick consumption or specialized storage to prevent spoilage.  CHARACTERISTICS OF AGRICULTURAL PRODUCTS QUALITY VARIATION The quality of agricultural goods varies from year to year as well as season to season.  CHARACTERISTICS OF AGRICULTURAL PRODUCTS IDENTICAL PRODUCTS Farmers often produce similar products, leading to surplus or shortage. COMMODITY EXCHANGE  COMMODITY EXCHANGE Definition: Commodity exchange is a legal entity which provides an organized marketplace for trading in commodities.  COMMODITY EXCHANGE Commodity markets operate like other markets but with strong regulations. Trading occurs through legal entities known as commodity exchanges. WAYS TO TRADE SPOT MARKET COMMODITIES Immediate exchange of commodities for cash or goods at current market prices. FUTURES CONTRACT Contractual agreement to buy or sell a commodity at a specific future date and price.  COMMODITY EXCHANGE BASIS GRADE Definition: The minimum accepted standard for a deliverable commodity in a futures contract, known as the basis grade.  COMMODITY EXCHANGE BASIS GRADE Importance: Establishes a quality baseline for consistent BASELINE trading.  KEY TAKEAWAYS Agricultural commodities are essential for The commodity market operates through 1 3 food and industrial applications. exchanges with strict regulations. They possess unique characteristics like Basis grade determines the minimum 2 interchangeability and perishability. 4 quality standard for trading. THANK YOU!