How to Read Commodities Market Data

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Given the sheer number of quotes, vendors, products and mysterious symbols when it comes to commodities market data, you might be at a loss to decipher what it all means. In addition to futures data, you will often find options data and graphs that add to the confusion.

As a trader, make sure you keep each commodity's pricing "quirks" distinct. The prices themselves might seem straightforward enough, but not every commodity is listed in the same way. To overlook the individual differences of each product and its representative contract could be a costly mistake.

Get a handle on the naming and quoting conventions for your commodity product.

If you find your data through a news provider such as The Wall Street Journal or The New York Times, you do not have to worry about what the bizarre ticker codes stand for, since the products are listed without them. Even the CME itself displays price quotes without the special notation so you need not struggle to see that "CZ10.CBT" stands for the December 2010 CBOT contract for corn. Yahoo Finance lists ticker symbols as well as the product name.

For the exact product and month symbols for your commodity, refer to contract specifications posted by the exchanges or resources such as FuturesKnowledge.com, which provides a legend of contract month and product codes.

Read a futures chain downward for differing futures maturities.

You will sometimes encounter what is called a futures chain, or with options you might see an options chain. The CME, for example, will display any number of contracts with the same core product together in a data table. In the case of corn, as you go down the months column of this table, you might see futures contracts for March 2011, May 2011, July 2011, September 2011, December 2011, all the way through to 2014. Use these tables to compare contracts of varying maturities and their respective prices for a given trading day to get an overview of all the tradeable futures for your commodity.

Now that you have your contracts lined up, what are you looking for?

Read across the columns for a brief historical snapshot.

As you go along the various columns of a data table, you will notice headings such as High, Low, Last, Prior Settle, Bid, Ask, Change and Volume. See how the price of your commodity changed over the course of the day. Change refers to the difference between the last trade made and the previous day's settlement price.

Settlement price is determined at the end of a trading day for accounting purposes. Volume is the number of contracts traded for the day.

As for the prices themselves, watch out. The figure "91.50" might read as dollars and cents when dealing with gold and light sweet crude, but if dealing with coffee, orange juice, sugar and meats, that same figure will refer to cents per trading unit, with hundredths of a cent following the decimal point. Grains are unusual in that they are quoted in cents, followed by an apostrophe or hyphen, then a number (understood to be a multiple of 1/8 of one cent).

It is important to be clear on these terms, because you are basing your profit and loss calculations on the changes in price based on these units. Read the specifications for the commodity you are following, which will outline the units you are dealing with, contract size (pounds, metric tons, troy ounces, barrels and so on), tick size, trading hours, settlement procedures, and so forth.