Commodities - Market Information

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Tomorrow-Next (Tom-Next) Rates

The Tom-Next rate for a given market is the rate you must pay to roll a position (i.e. stop your position being closed tomorrow and keep it open until the next day). We utilise it in some of our funding charge formulas. The rate itself is determined by banks and the market.

For example, if you buy Spot Gold in the official markets (rather than just placing a bet on its price like you do with us), then this trade will usually settle T+2, meaning that (loosely speaking) two working days after the trade date, you will be locked into having gold delivered.

Suppose you bought Spot Gold on Monday, and it’s now Tuesday. As it stands, you have gold being delivered tomorrow (Wednesday), but if you don’t want to take this delivery tomorrow and would rather keep the position open, then you can roll it at whatever the prevailing Tom-Next rate is. From the perspective that it is now Tuesday, rolling the position once via Tom-Next rates extends the settlement date by one day to Thursday.

HOW TO

roll a COMMODITY trade

All spot commodity trades will automatically remain open indefinitely. Futures trades will close at the expiry date of the contract. You can specify whether you would like to roll any commodity futures trades to roll into the next contract by visiting the Rolling Trades page within My Account once you have logged in. Click the following link to find out information on setting your Trading Preferences. You can find the expiry date of each futures contract on the information button on our platform.

When you first open the account, as a default setting, all preferences are set for trades not to roll. If you wish for your trades to roll past their respective expiry dates it is essential that you have updated these preferences.

If you would like to roll all commodity trades, please ensure that the ‘Commodities’ box is ticked, as shown in the above example

Any stops or limits you have attached to your trade will be rolled over also, they will be adjusted to reflect the price of the new contract you have been rolled into.

how to 

go long and short in the same market

You are able to open a trade in the opposing direction to an existing trade in the same market, this is called a forced open trade. Rather than your positions netting off, you would now have open positions both long and short.

Forced open trades can be opened by placing a trade at the live available price or alternatively by adding an order to open at a different price, should the price subsequently move to the level of your order your forced open trade will be opened.

Forced open trades can be executed by ticking the forced open position on the deal ticket, you can also update your settings so the default setting is for forced open to always be selected.

It is important to note that placing forced open trades will result in increased costs. If you have forced open positions open overnight, the funding adjustments will be applied to all positions open and will lead to increased funding costs. These costs can be avoided by not placing forced open trades and just allowing your positions to net off eg. £10 long position and £10 short position = no net overall exposure.

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silver

Silver had been regarded as a form of money and a store of value for more than 4,000 years until the end of the silver standard in 1971 when the metal lost its role as legal tender in the United States.

Now silver is still commonly used as a form of investment, although is not anywhere near as popular as gold in this regard. It is also used in industrial applications such as in conductors. Silver futures are primarily traded on the New York Commodities Exchange (COMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange), and its price is quoted in cents per troy ounce.

In a similar manner to gold, silver is seen as a commodity to turn to during times of economic uncertainty. While silver often tracks gold prices, it can often be much more volatile.

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brent crude

Crude oil is the world’s most actively traded commodity and the two most heavily traded contracts on crude oil are the Brent Crude Oil contract and the West Texas Intermediate (WTI) Light Sweet Crude Oil contract.

Brent Crude, or Brent blend, is a combination of oil from 15 different fields in the Brent and Ninian systems in the North Sea. Although it could be said the oil is ‘light’ and ‘sweet’, it is not thought of as ‘light’ or as ‘sweet’ as West Texas Intermediate. It is ideal for making gasoline and middle distillates, both consumed in large quantities in Northwest Europe.

Brent Crude gets its name from the naming policy of operating companies, which originally named its fields after birds and in particular the Brent Goose. Brent Crude is generally considered as the major benchmark for other crude oils in Europe or Africa and prices for other crude oils are often based on a differential to Brent.

Until 1995 the commodity was traded on the International Petroleum Exchange in London, but are now traded on the electronic Atlanta-based Intercontinental Exchange Inc. (ICE), previously known as the Board of Trade of the City of New York (NYBOT).

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Palladium

Palladium and platinum are the most widely used of the six platinum group metals, which also include rhodium, ruthenium, osmium and iridium. They are used in manufacturing processes in a range of industries due to their catalytic functions, conductivity and resistance to corrosion.

Palladium is often found in catalytic converters as it helps lessen the impact of certain gases on the environment and is found extensively within computers and televisions. In the future, palladium will play a key role within hydrogen fuel cells.

Palladium futures are primarily traded on the New York Commodities Exchange (COMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange), and its price is quoted in US dollars per troy ounce.

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Natural gas

Natural gas is known as a very clean fuel which is used extensively around the world. A bulk of natural gas is in Russia and in the Middle East. It is predominately used in energy production.

Natural Gas futures are traded primarily on the New York Mercantile Exchange (NYMEX), a subsidiary of the CME Group (Chicago Mercantile Exchange), with prices quoted in US dollars per million British thermal units.

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corn

Corn is used primarily to feed livestock, but also has other uses in food production, bio fuels and even within commercial applications such as glue. The United States produces more than 50% of the world’s total harvest as the majority of the crops in the United States are genetically modified.

Corn futures are primarily traded on the Chicago Board of Trade (CBOT), a subsidiary of the CME Group (Chicago Mercantile Exchange), with prices quoted in cents per bushel.

When spread betting on corn you trade per cent movement. Price movements can sometimes be volatile with up to 100 point movements per day occurring with regularity.

When spread betting on corn it’s worth considering several major factors which can influence the price. The demand for corn comes mainly from livestock feed and bio fuel production so it is important to monitor the demand within these markets. It is important to monitor weather, disease and other factors which could reduce or improve the size of the harvest. As corn’s price is quoted in US dollars, any fluctuations in the value of the American currency can also influence the price of corn.

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sugar

Sugar is used as a natural sweetener for food and drinks and increasingly used to produce ethanol, a biofuel. Sugar can be produced from sugar beet or sugar cane. Most production comes from Brazil, the United States and China.

Sugar #11 futures are primarily traded on the InterContinentalExchange (ICE) with prices quoted in cents per pound.

When spread betting on sugar there are several major factors to monitor which can influence the price. These would include the demand for alternatives to sugar such as artificial sweeteners, the demand for bio fuel, which is inversely correlated to the price of crude oil, and political influences such as subsidies. As sugar’s price is quoted in US dollars, any fluctuations in the value of the American currency can also influence the price of sugar.