Commodity Market

Issue

   The commodity market provides the means for trading a number of products and raw materials in the world (e.g., oil, wheat, gold, livestock). The problem is that if a particular issue occurs in a specific region, it also negatively affects the price of the commodity in other regions as well.

Solution

   To prevent this, the commodity market should become segmented and regionally-based so that any detrimental effects that may occur in a given region would be restricted to that specific region (e.g., corn-east, corn-west, etc.). So, if an environmental condition such as a drought occurred in a specific region, the price reflected in the commodity market would only affect that particular area of the world and not elsewhere.

   By regionalizing the market, not only will it provide a certain degree of protection against natural disasters, it will also provide protection for man-made situations as well (such as military conflicts or trade embargoes). For example, if an armed conflict occurred in the Middle East, it would only affect the price of oil from that particular region and not elsewhere such as the Americas (America, Brazil), Asia (Russia, Kazakhstan), or the Arctic (Canada, Norway).

   In summary, the commodity market should become more segmented so that regional events won't impact the global economy.