CFD commodities traders main tool is the fundamental analysis. Which focuses on analyzing the overall state of the economy, production, supply and demand. The principal objective is to predict were the prices of a specific commodity will be in the near future.
CFD commodities traders have the advantage that they can trade in any economical cycle. Whether the economy is expanding or contracting they can always try to profit. The main thing to have in mind when doing fundamental analysis is the supply and demand factor.
Supply is the total amount of a specific product available for purchase and includes stock carried over from previous production and the new amount of stock been currently produced. Usually the more is carried over from the previous period of production the lower the price tend to be at the moment of purchase, as most physical commodities brokers and producer prefer not to hold on to old stock.
Demand in the other hand is the amount that is purchased at certain price. Usually demand will increase when prices are low and will decrease as the prices increases.
Supply and demand can be affected for all sort of events. And in the markets it is typical that traders will speculate on this events. For instance if there is storm in the golf of Mexico and it might interrupt oil production it is probable that oil prices could rise even if the storm never happens.
Predicting commodities prices, specially this days with state of the global economic, isn’t an easy task. The best recommendation to any trader is to do proper research and keep up to date.