Commodities in the UK can speculate on the price movements of commodities like oil and gold, by trading derivatives such as Contracts for Difference (CFDs) or through physical transactions with products like precious metal bullions. In recent years, Commodity trading has become increasingly popular in the UK as a way to diversify portfolios and protect against inflation.

Hard commodities, such as energy and metals, tend to be volatile due to supply and demand dynamics. During times of economic expansion and rising global demand for these goods, prices will rise and vice versa. Soft commodities, such as agricultural crops, are also subject to price fluctuations. A good harvest will drive prices down, but when an agricultural crop is impacted by factors such as avian flu and rising production costs, this can have the opposite effect and push prices higher.

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The UK’s agriculture sector is also influenced by global events. Last year, for example, the UK’s cattle herd was cut by 15% and suckler-bred heifer numbers slumped by 45% according to Defra data. This was driven by higher feed costs, falling consumer spending and the continued impact of avian flu.

The resulting shortage of suckler-bred heifers and cows is expected to push farmgate prices higher again this year. Meanwhile, the UK’s membership of the Comprehensive & Progressive Agreement for Trans-Pacific Partnership could lead to reduced tariff rates and quicker border processes on imports of food and drink ingredients from countries in the region.