Forex Digest

I am doing a project and I have absolutely no idea what the freak an Agricultural Commodity Broker is. Can someone help?

Sure! A broker is somebody who acts as a middleman between somebody who is buying something--usually an investment in the Wall Street sense of the word--and somebody who is selling the same thing. The broker charges a fee, called a commission, for matching up the buyer and the seller.

A commodity broker is somebody who matches up buyers and sellers of commodities, that is, of actual physical goods. Some examples of commodities are oil, natural gas, gold, beef, pork bellies, corn, and wheat. The important point is that commodities have to be essentially interchangeable with each other: one barrel of natural gas has to be just as valuable, and no more valuable, than another barrel in order to make it a commodity, and one boxcar of corn needs to look the same as a different boxcar of corn. That's because the broker will buy and sell the commodity sight-unseen. If boxcar 1 is worth more than boxcar 2, then the whole system breaks down. But Kellog's doesn't want to go out and look at every single farm and every single boxcar of corn out there just to make corn flakes. Instead, they want to call their broker and order 300 tons of corn, which will all meet a certain standard and look about the same. So most growers grow their corn to look about the same, and then it is traded with future contracts on a commodities exchange. To make the trades work, a broker matches up the corn sellers with the people who want to buy the corn.

By now you've figured out that an agricultural commodity broker is somebody who matches up buyers and sellers of corn and wheat and beef, but who has nothing whatsoever to do with oil and gold. That's right.

2009-01-23 08:18:37 by Maddie Lilliann

A commodities broker is different from a stockbroker, and a commodities trading house is needed in order to sponsor someone to take the series 3 ...

I currently use Farr Financial, paying $18 per option contract. Farr's "OK". Nothing special. I'm low maintenance, this isn't my first rodeo, when I ask the rare question I expect a prompt, accurate answer. Their reply is generally "HUH?" But I don't ask the simple questions, been there, done that. I generally enter a position in grains, or softs, by selling a put. Occassionally I'll be assigned the contract, so I'm looking for the least expensive online commodity broker for grains and softs options and contracts. I understand the numerous additional charges are all standard to the industry. Thank you for your time.

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Good Luck , Best Wishes!

2007-06-01 08:50:01 by OklahomaCPA

Balance in margin account of a trader(investor) remains idle most of the time to the tune of 70% of the deposit. Only up-to 30% of the funds used for trading purpose. Can the broker utilize the funds for trading on behalf of of third parties who is not the original contributor.

Nope.

The customers' funds are kept segregated.

Note: (1) the 70% is not "idle"; it is a reserve for drawdowns.
(2) the 30% is not "used in trading", it is just held as a security deposit or performance bond, whichever way you want to look at it. "Margin" in commodities has nothing to do with "margin" in stock trading, where it is a down payment.

The broker is allowed to buy treasury bills and hold those as margin. The broker keeps the interest. That's why brokers never complain about inactive accounts.

2009-10-20 01:40:55 by Haladhar

Former commodity broker on the N.Y. mercantile exchange

I'm a success coach with a NYSE company and we teach people how to make full time income part time from home. For more info, view a 15-minute online presentation at www.wardoffidtheft.com.

Best of luck!

2008-04-07 18:25:19 by HENRY D

Usually a commodity futures broker would be a highly quantitative and specialized individual. Most get directly hired out of top MS Financial Engineering, MS Engineering or MBA programs in top business/engineering schools (think MIT, Columbia, UPenn Wharton) and goes through extensive training in quantitative finance and mathematics both in school and on the job itself.

The earning potential is enormous. New grads usually start at the associate level and earn about 200-300K their first year. However, later on the bonus (which really is the meat of the compensation package) is entirely dependent on performance, and multimillion dollar bonus for top traders are not unusual at all. It's not an exaggeration to say "sky is the limit" when it comes to pay, as long as you are good.

2007-05-28 19:34:02 by Captain Kid