How to invest in oil and agricultural commodities?

[dragon]

Hi Dennis,

May I pls know what are the ways to invest in oil and agricultural commodities? Thanks!

[Dennis Ng]

Hi Dennis,

May I pls know what are the ways to invest in oil and agricultural commodities? Thanks!

maybe through Oil and commodity futures? Frankly, I don't and did not find out the ways of doing so.

[alvin]

You can take a look at Lyxor CRB Commodities Index, which is traded in SGX.

THere are many Commodities Unit Trusts too.

[dragon]

You can take a look at Lyxor CRB Commodities Index, which is traded in SGX.

THere are many Commodities Unit Trusts too.

Thanks for your replies, Dennis and Alvin!

[wemakebread]

IG Markets offers oil, corn, soya & wheat.

Oil there are at least 2 kinds, Brent Crude and US Light Crude.
You can buy futures which expire in Jul, Aug or Sep.
Besides oil, there is also Heating Oil, Natural Gas & No Lead Gasoline.


All these are in the form of futures, with a very specific expiry date.
Very high risk, in my opinion.

[dragon]

IG Markets offers oil, corn, soya & wheat.

Oil there are at least 2 kinds, Brent Crude and US Light Crude.
You can buy futures which expire in Jul, Aug or Sep.
Besides oil, there is also Heating Oil, Natural Gas & No Lead Gasoline.


All these are in the form of futures, with a very specific expiry date.
Very high risk, in my opinion.

Thanks for your info, Wemakebread.

[Stradlinz]

IG Markets offers oil, corn, soya & wheat.

Oil there are at least 2 kinds, Brent Crude and US Light Crude.
You can buy futures which expire in Jul, Aug or Sep.
Besides oil, there is also Heating Oil, Natural Gas & No Lead Gasoline.


All these are in the form of futures, with a very specific expiry date.
Very high risk, in my opinion.

I think in this case IG Markets will act as Market Market rite? Meaning that for every customer's position, they will take on the opposite side of the trade. It's the same as CFDs. There won't be any real positions traded on the exchanges.

So the biggest risk is during extreme market conditions , they can choose to close shop and not obligated to take in your trade even when u wanna get out of your position. Another risk is off course counterparty risk, meaning if IG Markets goes bust so is your money.

[alvin]

IG Markets only offers CFDs. Even for such commodities futures, it is CFD. So like what Stradlinz said, likely in this case they will act as market maker. It would be more obvious if the commission is cheap, cheaper than trading futures.

As IG Markets is regulated by MAS, the clients' capital must be kept in a third party bank. So if debtors go after IG, they cannot touch clients' money.

[wemakebread]

The nature of instrument (CFD) and the underlying commodities (be it oil, corn, soya or wheat) both belong to high risk category.

I also agree that IG Market is market maker. Risks mentioned by Alvin & Stradlinz are very real and possible.

The redeeming factor is that IG Asia Ptd Ltd has a Singapore office in Chevron House. It is a Capital Markets Services License Holder regulated by MAS to deal in securities, futures and forex.

But whether clients' money are held in segregated account, honestly I have not come across such a claim from them before. So I suspect answer could be no. Therefore I am not so sure what kind of "protection" customers will get from this MAS regulated market maker.

[Sigmar]

You may also like to look at the commodities ETF that are listed in NYSE.

For oil, the more popular one is United States Oil Fund LP. Counter is USO.
For Agriculture, there is PowerShares DB Agriculture Fund. Counter is DBA.