1 General Observations on the Physical Trading of Commodities

The physical trading of large commodities clearly differs from the trade of transformed products on several important points. Competition through prices plays a decisive role as these commodities are standardized and there cannot really be competition through differentiation in the product itself, only in the logistical services and financial conditions attached to the transaction. There may be large fluctuations in price, both in the short term as well as in the long term, which could be problematic for producers as well as intermediaries and transformers. Finally, given their strategic importance, states intervene in the trading of commodities either directly (as vendors, buyers or stockers) or indirectly through regulations that are put in place.

1.1. The standardization of commodities and commercial contracts

In the context of a commercial transaction related to transformed products, vendors and buyers negotiate both the technical characteristics and prices. In the case of commodities, the standardized physical characteristics are agreed upon by all operators and, thus, negotiations revolve chiefly around the prices. In practice, these negotiations are very brief: if, at a given point of time, a certain price is acceptable to both a buyer and a seller, an agreement is very quickly established between the two parties and the transaction is carried out. If the quality of the products delivered is better than standard ...

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