Methods of dealing

The methods of dealing in the commodity markets vary greatly because they are the result of a century or more of trading in the particular commodities concerned. To some extent the method is affected by the commodity itself.

Where a product has, or can be given, a uniform standard quality, dealings are made much easier, because the dealers know with certainty what they are buying and selling. For example, on the London Metal Exchange the commodities dealt in are called Standard Copper, Standard Tin, etc. the quality of these products can be scientifically tested and established.

Tea, on the other hand, is unsusceptible to standardization. The quality varies not only from growing area to growing area but also seasonal differences in the same area. Even on a given bush the leaves vary from poor to top quality. Similarly, on two sheep give wool that is alike: some sheep are contended and docile, with a good fleece, while others are temperamental and grow a poor-quality fleece. Products such as tea and wool must therefore be sampled by the buyers before they can decide on a fair price. In particular, if a commodity can be standardized so that dealers know with certainty what they are buying and selling it makes possible a 'futures' market. Futures markets are particularly useful in reducing the risks of business life.

The chief types of dealing are:

1. auction sales;

2. ring trading;

3. private treaty;

4. a special case - diamonds.

(1470)

Notes

1. a fair price - умеренная (договорная) цена

2. 'futures' market - рынок срочных сделок

3. ring trading – свободный биржевой торг

4. private treaty - частный договор

Задание 1. Прочитайте и переведите текст.

Задание 2. Ответьте на следующие вопросы:

1. Why do the methods of dealing in the commodity markets vary greatly?

2. When must products such as tea and wool be sampled by the buyers?

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