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How to invest in commodities in Australia

Find out how you can invest in commodities such as coffee, cotton and even cattle in Australia.

Commodities are often an overlooked component of an investment portfolio but can help investors smooth out returns. This is because both soft and hard commodities have an overall positive return over the long run and act as a hedge against inflation.

This guide will help you find out why they might have volatile prices, whether they're a good investment and how you can invest in them from Australia.

How can I invest in commodities?

There are 4 different ways that you can invest in commodities:

  1. Purchasing the commodity
  2. Investing in commodity futures contracts
  3. Buying commodity exchange traded funds (ETFs)
  4. Buying stocks and shares in companies that produce commodities

What are commodities?

Commodities are basic natural resources such as oil, food and metals. They can be thought of in some ways as the basic building blocks of our economy.

Commodities are most often used in the production of goods and services. If you are thinking about commodities, basically think of the raw materials used in manufactured finished goods.

There are 2 categories of commodities:

  • Hard commodities are those that need to be mined or drilled to be found, such as metals and energy products.
  • Soft commodities are those which are grown, like corn and wheat.

Are commodities volatile?

Commodity volatility (how much the price moves up and down) is generally reflective of supply and demand. If there were loads of avocados grown just as everyone decided they didn't like guacamole anymore, then the price of your average avocado is likely to go down. If a worldwide virus leads to everyone panic buying toilet rolls, you're likely to see the price rise.

Due to supply and demand, the volatility of commodities tends to be higher than for other types of investment, but this depends entirely on the commodity.

Types of commodities

This isn't an exhaustive list of commodities, but it gives you a good idea of what can be considered to be a commodity.

  1. Agricultural products. These are soft commodities such as corn, cocoa, coffee, wheat, soybean, coffee, orange juice, oats and lumber.
  2. Livestock and meat. These are soft commodities. Think of items such as live cattle, beef, pork and milk.
  3. Energy products. These are hard commodities. They include natural gas, coal, oil, ethanol and propane.
  4. Metals. These are hard commodities. These commodities can be broken into 2 types: precious metals, such as gold, silver, platinum and bronze, and industrial metals, such as copper, aluminium, zinc and tin.

Purchasing the commodity

You can choose to invest in a commodity by purchasing the commodity.

In Australia, you can do this by looking for a dealer that sells the commodity and purchase it from them. You can choose whether you want to eventually sell it back to the original dealer or to sell it to someone else.

This is often done with gold and silver, but you'll need to ensure that you have somewhere to store the commodity between buying and selling it.

Commodity futures contracts

This is probably the most common way to trade commodities. With futures contracts, you are agreeing to purchase commodities at a specified point in the future. These were created for sellers like farmers, who would start growing a type of commodity, such as wheat, long before it could actually be sold to help manage the financial risk.

Nowadays, futures contracts aren't solely for farming. You can purchase futures contracts in just about anything, and they don't always end with physical items.

Physical commodities trading is only available to advanced traders or corporations. In Australia, retail investors can trade commodities via contracts for difference (CFDs). These are derivatives contracts where you're not actually trading the underlying asset, instead, you're speculating on the price volatility of commodities. Traders typically use leverage, which can make CFDs a lot riskier than stock trading. But remember, trading CFDs is significantly more risky than trading traditional shares due to factors including leverage.

Disclaimer: General information only. All forms of investments (and in particular, trading CFDs, commodities and forex) carry significant risk, including the risk of losing more than the invested amounts, market volatility and liquidity risks. Past performance is no guarantee of future results. Such activities are not suitable for most investors.
Name Product Minimum Opening Deposit Minimum Opening Deposit Commission - ASX 200 Shares Available CFD markets Platforms
Pepperstone CFD
$0
$0
$5 or 0.07%
Australian Stocks, Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices (CFDs only)
MetaTrader 4
MetaTrader 5
cTrader
TradingView
Pepperstone Trading Platform
Disclaimer: CFD Service. Your capital is at risk.
Get access to more than 60+ forex and CFD markets when you sign up with this award-winning Australian broker. Plus, access the new advanced TradingView charts platform.
Vantage CFD
$50
$50
No commission
Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices (CFDs only)
MetaTrader 4
MetaTrader 5
TradingView
Disclaimer: CFD Service. Your capital is at risk.
Vantage has some of the lowest CFD trading fees in Australia including $0 commissions on all Gold trades. Plus you can find global trends and place trades through the new TradingView charts platform.
IG CFD broker
$0
$0
0.08% with $7 minimum
Bonds, Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices, Options (CFDs only)
MetaTrader 4
ProReal Time
IG Trading Platform and Apps
L2
Disclaimer: CFD Service. Your capital is at risk.
Trade from over 15,000 markets with Australia's leading service for CFD trading and forex.
Plus500 CFD
$100
$100
No commission
Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices, Options (CFDs only)
Plus500 Trading Platform
Disclaimer: CFD service. Your capital is at risk.
Trade CFDs on Australian and International shares, indices, cryptocurrencies, commodities and more.
IC Markets CFD (True ECN Account)
US$200
US$200
0.1% per side
Australian Stocks, Global Stocks, Indices, Commodities, Forex, Cryptocurrencies (CFDs only)
MetaTrader 4
MetaTrader 5
cTrader
Disclaimer: CFD Service. Your capital is at risk.
Trade 230+ different products with fast execution under 40 milliseconds on average.
Saxo Invested CFD
0
0
0.08% with $3 minimum
Bonds, Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices, Options, (CFDs only)
SaxoTraderGO
SaxoTraderPRO
Disclaimer: CFD Service. Your capital is at risk.
Award-winning trading platfrom with extensive charting tools and reliable execution.
Blueberry Markets CFD Trading
US$100
US$100
$20 per month subscription plus 2% of trade size
Australian Stocks, Commodities, Cryptocurrencies, Indices (CFDs only)
MetaTrader 5
Disclaimer: CFD Service. Your capital is at risk.
Bottom of the market fees on forex, CFDs and commodities with 24/7 quality customer service.
ACY Securities CFD
$50
$50
No commission
Australian Stocks, Bonds, Commodities, Cryptocurrencies, ETFs, Forex, Global Stocks, Indices, Metals (CFDs only)
MetaTrader 4
MetaTrader 5
Disclaimer: CFD Service. Your capital is at risk. Trade over 2,000 products across CFDs, forex, indices, metals, shares, commodities and cryptocurrency, starting from as low as $50 a trade.
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Trading CFDs and forex on leverage is high-risk and you could lose more than your initial investment. It may not be suitable for every investor. Refer to the provider’s PDS and consider the risks before trading.

Buying commodity exchange traded funds (ETFs)

Commodity ETFs allow you to invest in a series of different firms or companies, allowing you to spread your investment out and reduce the risk.

ETFs are a much simpler way of accessing the stock market, so they're quite well suited to you if you're a newbie. There are loads of ETFs in Australia for a huge range of different commodities, so you have plenty of choice.

Name Product Brokerage on AU ETFs Inactivity fee Asset class
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
$3
$0
ASX shares, Global shares, US shares, ETFs
Finder exclusive: Get an additional 30 days on top of the regular brokerage-free period for new accounts. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Tiger Brokers
Exclusive
Tiger Brokers
$5.50
$0
ASX shares, Global shares, US shares, ETFs
Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply.
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
Webull
$4.90
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Sign up & deposit $200 to get $100 of rewards value, or deposit $1,000 to get $200 worth. Up to $5,450 value available. T&Cs apply.
Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.
Saxo Invested
Saxo Invested
$3
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Access 6,400 ETFs over 30 exchanges worldwide
Low fees for Australian and global ETF investing, no inactivity fees and foreign currency accounts available.
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Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Buying stocks and shares in companies that produce commodities

Which stocks and shares you choose to purchase will depend on what specific commodity you fancy investing in. Do some research into the commodity you want to invest in to find out some companies that produce it and buy shares in those companies.

You might need to know your way around the Australian stock market to buy shares. The share trading platform that you choose to use will have some guidance to help you along the way.

Are commodities a good investment?

All investing carries risk, but many commodities are items that consumers continue to buy even in a recession. Everyone will still need to eat, for example, so some people view commodities as less risky, but within that, there will be a huge range – oil is a commodity and can be highly volatile.

Compare share trading platforms

Name Product Price per trade Inactivity fee Asset class International
eToro
Finder AwardExclusive
eToro
$0
US$10 per month if there’s been no log-in for 12 months
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get 12 months of investment tracking app Delta PRO for free when you fund your eToro account (T&Cs apply).
CFD service. Capital at risk.
Join the world's biggest social trading network when you trade stocks, commodities and currencies from the one account.
CMC Invest
Finder Award
CMC Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
$0 brokerage on US, UK, Canadian and Japanese markets (FX spreads apply).
Trade over 45,000 shares and ETFs from Australia and 15 major global markets. Plus, buy Aussie shares or ETFs for $0 brokerage up to $1,000 (First buy order of each security, each day - excludes margin loan settled trades).
Moomoo Share Trading
US$0.99
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: Get an additional 30 days on top of the regular brokerage-free period for new accounts. T&Cs apply.
Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 20 million investors.
Spaceship US Investing
US$0
$0
US shares, ETFs
Yes
Dive into US markets with $0 brokerage, starting with just a $10 investment.
Unlock US stocks and ETFs with minimal entry barriers, offering straightforward, low-cost options for new and seasoned investors.
Tiger Brokers
US$2
$0
ASX shares, Global shares, US shares, ETFs
Yes
Finder exclusive: 10 no-brokerage US or ASX market trades in the first 180 days + 7% p.a. on uninvested cash with first deposit of any amount, plus US$30 TSLA + US$30 NVDA shares with deposits up to AU$2000. T&Cs apply.
Trade Australian, US and Asian stocks with no minimum deposit on Tiger Broker’s feature-packed platform.
Webull
US$0.25
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Sign up & deposit $200 to get $100 of rewards value, or deposit $1,000 to get $200 worth. Up to $5,450 value available. T&Cs apply.
Trade ASX and US stocks and US options, plus gain access to inbuilt news platforms and educational resources. You can also start trading for less with fractional shares.
Saxo Invested
US$1
$0
ASX shares, Global shares, Options trading, US shares, ETFs
Yes
Access 22,000+ stocks on 50+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
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Important information: Powered by Finder.com.au. This information is general in nature and is no substitute for professional advice. It does not take into account your personal situation. This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for most investors. You do not own or have any interest in the underlying asset. Capital is at risk, including the risk of losing more than the amount originally put in, market volatility and liquidity risks. Past performance is no guarantee of future results. Tax on profits may apply. Consider the Product Disclosure Statement and Target Market Determination for the product on the provider's website. Consider your own circumstances, including whether you can afford to take the high risk of losing your money and possess the relevant experience and knowledge. We recommend that you obtain independent advice from a suitably licensed financial advisor before making any trades.

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