Summary: Commodities, encompassing a broad array of raw materials from metals to agricultural products, are a popular avenue for investors seeking diversification or a hedge against inflation. One of the simplest and safest ways to invest in commodities is through a regulated online broker like eToro. Keep reading as we investigate the top 5 commodities to invest in 2024.
Best Commodities Broker for Intermediate Traders and Investors
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Invest in 30+ commodities and 3,000+ other assets including stocks and cryptocurrencies.
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0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
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Copy top-performing traders in real time, automatically.
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eToro USA is registered with FINRA for securities trading.
5 best commodities to invest in 2024
The practice of trading commodities dates back to the annals of human history, outdating the trading of stocks and bonds by several centuries, as ancient tribes and nascent kingdoms would barter and trade with each other, exchanging food, supplies, and other items.
In our modern era, the trading of commodities continues unabated, magnified significantly in its scale and global reach, and there are more options for participating in the commodity markets than ever before (we’ll get into that later).
But for now, here are five commodities you should consider adding to your portfolio in 2024.
#1 Oil
Oil is an essential global commodity, serving as the primary energy source for transportation and a key component in manufacturing processes. In fact, any fluctuations in its price can trigger ripple effects through the broader economy.
Supply and demand dynamics is the primary factor driving the cost of crude oil. Prices tend to decrease when there is an excess supply and diminished demand. Conversely, prices tend to increase when demand rises, and supply is scarce. Alterations in perceived supply and demand can be influenced by geopolitical events (e.g., Russia’s invasion of Ukraine) or natural catastrophes (e.g., the Covid-19 pandemic) that affect oil-producing nations.
To the investor, oil can be a speculative asset, a portfolio diversifier, as well as a potential hedge against inflation. It’s important to note that oil is known for its inherent volatility. As such, investing in oil requires careful consideration of market trends, risk management strategies, and a thorough understanding of the factors impacting its price.
Note
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
#2 Palladium
Palladium is a lustrous, silver-like metal thirty times rarer than gold that can be used in various manufacturing processes.
More than half of the palladium supply is utilized in catalytic converters that transform up to 90% of harmful gases from car exhaust into nontoxic substances. The metal also finds use in electronics, dentistry, medicine, hydrogen purification, fuel cells to generate power, and jewelry making.
The bulk of palladium’s global supply is sourced from mines in the United States, Russia, South Africa, and Canada.
Palladium’s appeal as an investment is fueled by robust demand from the automotive industry, its distinctive characteristics, and scarce availability, all of which collectively contribute to its escalating price and market worth.
Note
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
#3 Corn
Corn (also known as maize), first domesticated by indigenous populations in the southern regions of Mexico roughly 10,000 years ago, is a cereal grain extensively cultivated worldwide.
In many countries, corn is a vital food source (masa, polenta, cereal, popcorn, corn starch by-products like corn syrup, etc.), exceeding production amounts of other staple crops like wheat and rice.
Beyond food, corn is used as feed for livestock and to produce corn ethanol, a biofuel mixed with gasoline. Additionally, corn is used to produce a wide range of industrial products, including plastics, textiles, adhesives, and even pharmaceuticals. It’s a versatile crop that is vital to the global economy.
Note
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
#4 Cotton
Cotton is a soft, fluffy fiber that grows in a boll around the seeds of the cotton plant, a shrub native to tropical and subtropical regions around the world. It is primarily cultivated for its fiber, which is spun into yarn or thread to create a soft, breathable textile – cotton fabric.
In addition to its textile applications, cotton is essential for a variety of products, including fishing nets, coffee filters, tents, and manufacturing explosives (nitrocellulose). It’s also in use for the production of cotton paper and bookbinding. After ginning the cotton, the remaining cottonseed is used to extract cottonseed oil, while the residual cottonseed meal is repurposed as feed for livestock.
The price of cotton as a commodity can fluctuate based on various factors, including weather conditions, crop diseases, changes in global demand, and geopolitical factors.
Note
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
#5 Wheat
Wheat is a cereal grain that is one of the most important staple foods in the world. Originating from ancient grains in the Middle East, it’s now cultivated worldwide and is the second-largest cereal crop in terms of production, following corn.
The cost of wheat depends on various supply and demand elements, notably the price of oil, global population trends, income growth, geopolitical occurrences impacting key producers (Russia’s invasion of Ukraine that sent wheat prices soaring), the cost of substitute grains, and climatic conditions that can alter supply. That said, the steady demand for it facilitates a stable market for wheat, mitigating the price fluctuations typically linked with other commodities.
Note
51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
If you’re looking for commodities not on this list, check out our selection of commodity investing guides here:
- How to Invest in Platinum;
- How to invest in Copper;
- How to Invest in Coffee;
- How to Invest in Corn;
- How to Invest in Sugar;
- How to Invest in Soybeans;
- How to Invest in Cocoa;
- How to Invest in Aluminum;
- How to Invest in Rice;
- How to Invest in Lead;
- How to Invest in Zinc;
- How to Invest in Cattle;
- How to Invest in Gasoline.
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How to invest in commodities: Step-by-step
You can start in minutes with a few simple steps:
- Step 1: Register on eToro and verify your new account (personal or business);
- Step 2: You have to fund your account before you can start buying commodities. Several deposit methods will be available to you, including linking your bank account, using a debit or credit card, as well as employing third-party payment methods like PayPal, Neteller, or Skrill;
- Step 3: Navigate to the commodities markets page, choose a commodity, and select TRADE;
- Step 4: Click on BUY for a long position (or SELL, if you want to go short);
- Step 5: Input the desired cash amount or number of units for your trade;
- Step 6: Review and adjust the stop loss, leverage, and take profit settings;
- Step 7: Click OPEN TRADE.
Disclaimer: 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. This content is not intended for US users. eToro USA LLC does not offer CFDs, only real Crypto assets, Stocks and ETFs are available.
Best Commodities Broker for Intermediate Traders and Investors
-
Invest in 30+ commodities and 3,000+ other assets including stocks and cryptocurrencies.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
Important
There are even more options for investing in commodities, including:
- Commodity ETFs and mutual funds: If you prefer to avoid the risks that fast-paced and margin-dependent derivatives markets present, a practical option is to invest in ETFs that track the commodity giving you diversified exposure to the commodities market as a whole or the commodity you’re interested in;
- Futures contracts: Commodities futures are contracts to buy or sell a specific quantity of a commodity at a specified price on a particular future date. You can trade futures on exchanges and are the most direct method of owning physical commodities. However, they can be highly complex and risky, requiring a much deeper understanding of the market;
- Commodity stocks or ETFs: Buying shares of companies or ETFs in commodity-related industries is another way to invest in commodities. This could mean investing in mining companies for commodities like gold and silver or energy companies for oil and natural gas.
Note
Common mistakes to avoid when investing in commodities
These are the common mistakes that investors should be aware of and hopefully avoid when investing in commodities:
- Lack of research: Every commodity has its unique set of supply and demand dynamics. Before investing in any commodity, it is important to understand its market thoroughly;
- Ignoring the impact of global events: This can include geopolitical conflicts, changes in government policies, global economic trends, and even changes in weather patterns. Ignoring these can lead to miscalculated investment decisions;
- Not diversifying: While commodities diversify a portfolio, it’s also important to diversify within the commodities portfolio itself;
- Chasing trends: Like other investments, it’s usually not a good strategy to invest in a commodity just because its price has been rising rapidly;
- Going overboard with leverage: Leverage amplifies your risk-return ratio, so use it with caution;
- Overexposure: While commodities can be a valuable part of a diversified portfolio, overexposure to commodities can be risky. The thing is—they can be more volatile and less predictable than other types of investments;
- Ignoring the tax implications: It’s essential to understand the specific tax implications in your area.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about commodities
How to invest in commodities?
Various options exist for investing in commodities, including commodity ETFs, commodity-related stocks, and CFDs. These financial instruments offer exposure to the commodity’s price fluctuations without requiring physical ownership of the raw material, accommodating various risk appetites and growth prospects.
Where to invest in commodities?
You can invest in commodities through various online broker services, such as eToro.
Are commodities a good investment?
Commodities are a great way to diversify your investment portfolio, protect against inflation, and potentially profit from global economic growth. However, given their track record of low long-term returns and high volatility, investors choosing to venture into commodities may want to consider keeping their allocations relatively small and well-diversified.
What are the 5 best commodities to invest in 2024?
The best commodities to invest in 2024 include the followoing. Oil due to its central role in transportation and manufacturing. Palladium since its valuable in the automotive and electronics industries. Corn as it’s a versatile staple in food and industrial products; Cotton, used in textiles and various other products. Fourthly, Wheat as it’s a crucial staple food with a stable market. These commodities have essential roles in the global economy and their potential for investment growth.
Best Commodities Broker for Intermediate Traders and Investors
-
Invest in 30+ commodities and 3,000+ other assets including stocks and cryptocurrencies.
-
0% commission on buying stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.
-
Copy top-performing traders in real time, automatically.
-
eToro USA is registered with FINRA for securities trading.
