This chapter is intended for those who have a limited understanding of futures markets. Section 2 and 3 discuss how to use commodity futures markets to establish forward prices for your commodities. Section 2 is devoted exclusively to using futures markets while section 3 discusses using commodity options. Throughout, a number of examples are used to illustrate how these methods work. Section 4 and 5 present some of the basic tools of fundamental and technical analysis.
Fundamental analysis is the use of commodity supply and demand data to make price projections.
In section 4, we show some simple fundamental analysis can be used to predict commodity prices and help you know when to establish a price using a forward pricing contract. Section 5 discusses some simple technical analysis techniques which are based on commodity chart patterns.