How To Buy Commodities At Low Prices And Sell At High Prices

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How To Buy Commodities At Low Prices And Sell At High Prices

How To Buy Commodities At Low Prices And Sell At High Prices | Image Source: Pexels

Trading physical commodities has been happening throughout history. Whether it’s agricultural products like ginger, cocoa, cashew, sesame, or solid minerals like copper, nickel, lithium, zinc, or even petroleum products like crude oil, gasoline, gasoil, and more, their physical trade has happened throughout history with millions of traders buying at a low price to sell at a higher price either immediately or at a later time in the future when they can make a lot more profits.

How then do people accurately predict the future to be able to make 50%, 70%, or even over 100% profits from the commodities they’re trading today?

See Also: 6 International Commodity Testing Labs And Inspection Companies You Can Use To Guarantee The Quality Of Goods Before And During Export



The commodities that high margins are easily made on in a hedging system of buying today to sell in the future are mostly agricultural products. But it also happens with solid minerals and in some cases, petroleum products too.

Without properly knowing what to do, just as you could make a huge profit in a timeframe, you could also generate a huge loss in the same timeframe.


When To Buy

1). Buy At The Start Of The Season:

For agricultural products, the best time is always to buy when the season is just starting. The reason is at this time, the prices for most agricultural products are usually 50% to 150% lower than what the price would be 4 to 8 months down the line.

Some products that usually have this high rises in price from the start of the season to 4 months later and rising are mostly ginger, soybeans, maize, and some other commodities.

See Also: 20+ Likely Questions International Buyers Ask Exporters Before Doing Business With Them And How To Answer


2). Buy Distressed Deals:

Distressed deals are urgent sales where a seller probably tried to deliver to a buyer and the buyer failed to perform their obligation to pay or any situation where a seller has a high emergency need to want to sell off a particular product in as little time as possible.

When a deal is distressed, the price of the product usually drops by 10-30% and in some cases, might even drop well over 50-80%!

Whenever you see an opportunity to purchase a distressed commodity that usually has a high value in the market place, buy it, store it, and sell at a much higher price later.


3). Buy When Prices Crash For Most Reasons:

Prices of high-valued commodities could crash for many reasons; maybe there’s suddenly a ban on transportation, a lockdown, or a rumoured hinderance to sale. When things like this happen, many people with the product are usually desperate to sell and in some instance the price of the commodity can fall to well below 50% of the original price.

If you have funds in times like this and the goods are not perishables that could be lost in a few months, you could buy the commodities and store them for later sale in the future when the conditions have changed and prices are now much higher due to scarcity.

See Also: 7 Logistic Mistakes To Never Make When Transporting Commodities


4). Buy When You Get Cheap Deals From Unpopular Locations:

Arbitrage is a key part of the commodity trading industry because it helps traders make better purchasing decisions by buying from regions where the overall cost of purchase, transportation, and more of a commodity to a selling region is cheaper and more cost-effective than in another region.

Rather than always buying commodities from popular locations where prices would be higher since everyone buys from them, you can visit unpopular/remote locations too and buy from them as prices there would be always lower.


When To Sell

1). Sell When It’s Offseason:

Just as the best time to buy is when the season starts, the best time to sell is months after the season has ended because by then the prices would have risen by 30-100+%


2). Sell When There’s High Scarcity Caused By Unnatural Market Forces:

Unnatural market forces can sometimes cause the prices of commodities to suddenly explode. Dry ginger for instance was selling for $1,100/mt before the pandemic hit in 2020 and a year after the pandemic is selling for more than $3,300/mt.

Face masks too exploded in price by over 1000% during the pandemic.

See Also: 7 Ways To Ensure You Maximise Your Profits On Every Export Transaction


3). Sell When You Get An Offer That Is Too Good To Be True:

Sometimes you may get an offer that is very high for the commodities you have in storage. This usually happens when the buyer is either desperate to purchase the product for a sudden immediate need or has a high paying contract and wouldn’t mind buy your product at a high price to execute it quickly as opposed to wasting a lot of time in the marketplace sourcing cheaper deals and risking getting cheated.

When you have situations like this, you can sell and sometimes make up to 100% in profits.


4). Sell To International Markets That Pay Very High For The Product:

International buyers in Europe and America usually pay at least 50% more than international buyers in Asia provided you can process the goods to their standards.

If you can secure international clients in Europe and America, you can sell your commodity as your margins would rise above 50%.

See Also: 2 Hot-Selling Commodities That You Can Export To Make 100% Profit On Every Sale


What are your thoughts on this article on how to buy commodities at low prices and sell at high prices at the right time? Let me know by leaving a comment below.

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