Best Commodity Brokers in 2025

Which raw materials can be traded online?

Commodities are raw materials or primary agricultural products that can be bought and sold on financial markets. They form the backbone of the global economy, fueling industries from energy and manufacturing to food and technology. Trading commodities online gives investors in Singapore access to international markets and the ability to capitalize on movements driven by supply and demand dynamics, geopolitical events, climate conditions, and macroeconomic trends.

Unlike stocks or bonds, commodity prices are heavily influenced by real-world events: weather changes can spike grain prices; political unrest can disrupt oil supply chains; global growth can boost demand for metals. Commodities are typically traded through various instruments, such as Contracts for Difference (CFDs), futures contracts, and Exchange Traded Funds (ETFs), each with different risk and leverage profiles. Understanding the fundamental differences between commodity categories—energy, metals, and agriculture—is key for building a balanced investment strategy.

Investing in Gold

Gold stands out as a safe-haven asset favored by those looking to limit portfolio risk, especially in times of financial crisis or rising inflation. Gold’s value is less linked to economic growth and more closely tied to global uncertainty and currency trends. Singaporean investors often use ETFs for easy access or CFDs for short-term speculation. Its relative stability suits those with a medium to long-term outlook.

Investing in Brent Crude Oil

Brent crude oil is the main benchmark for global oil prices. Oil markets are highly sensitive to geopolitical issues, OPEC supply decisions, and global economic growth. Investing in oil suits active investors comfortable with short-term volatility. Most participate via CFDs or futures for leveraged trading, but ETFs offer longer-term exposure. Oil can diversify a portfolio but comes with high risks and requires close market monitoring.

Investing in Natural Gas

Natural gas prices are notoriously volatile, often swinging in response to weather patterns, seasonal demand, and supply disruptions. This commodity appeals to experienced traders who can manage fast-moving markets. For Singaporean investors, CFDs and futures allow for both long and short strategies but require advanced risk control. Commodity ETFs provide a less risky alternative but may not fully track spot price changes.

Investing in Aluminium

Aluminium is essential for multiple industries, from transportation to packaging. Its price tends to follow global economic cycles and infrastructure investment. For investors in Singapore who want exposure to global manufacturing growth, aluminium can be accessed through ETFs, futures, and CFDs. It suits medium-term investors looking to capitalize on industrial trends.

Investing in Grains (Wheat, Corn, Soybeans)

Grains such as wheat, corn, and soybeans are staples of global food supply and are influenced by weather conditions, trade policies, and population growth, especially in Asia. Investing in grains can help diversify a portfolio and provide a thematic play on global food demand. CFDs and futures are suitable for active, short-term traders, while ETFs provide a simple way for Singapore-based retail investors to gain exposure with less risk.

This overview aims to help Singapore residents understand how commodities fit into different investment strategies, the specific risks tied to each asset, and the main routes to exposure through online trading platforms. Choosing the right instrument and commodity should always be guided by individual risk tolerance and investment goals.

How to invest in commodities?

Several methods exist for investing in commodities, each tailored to different investor profiles and objectives. Commodities are tangible assets—such as oil, gold, or agricultural products—accessible through various financial instruments. Whether you are seeking active short-term speculation or a stable, long-term hedge against inflation, understanding the main ways to gain exposure to commodities is essential for a well-diversified portfolio.

Investing via CFDs (Contracts for Difference)

CFDs are derivative products allowing you to speculate on the price movement of a commodity without owning the underlying asset. You enter a contract with a broker to exchange the difference in the value of a commodity between the opening and closing times of the position. Key advantages of CFDs include leverage, which amplifies potential gains and losses, and the opportunity to trade both in rising and falling markets. However, leverage and the speculative nature of CFDs make them riskier, especially in volatile commodity markets.

Example of a CFD on Oil

Suppose you believe Brent oil will rise in value. You open a CFD contract with leverage of 10:1, placing SGD 1,000. If the price rises 5%, your profit would be SGD 500 (minus fees), but if it falls 5%, your loss would be SGD 500, magnified due to leverage.

Investing via Futures Contracts

Futures contracts are standardized agreements traded on an exchange to buy or sell a specific quantity of a commodity at a predetermined price on a set future date. They are widely used for both hedging and speculative purposes. Futures require margin deposits and can be volatile, as slight price changes can mean significant gains or losses due to contract size and leverage. Many futures investors never take physical delivery; positions are offset before expiry.

Example of a Wheat Futures Contract

You enter into a standard wheat futures contract (e.g., 5,000 bushels) at SGD 6.00 per bushel. If wheat rises to SGD 6.20, your paper gain is SGD 1,000 (0.20 x 5,000), but if it drops to SGD 5.80, you incur a loss of SGD 1,000.

Investing via ETFs (Exchange Traded Funds)

ETFs offer exposure to commodities by tracking the price of a single commodity or a basket of them. Traded on stock exchanges like equities, ETFs provide liquidity, accessibility, and diversification without requiring direct purchase of the physical asset. They are suitable for investors seeking cost-effective, passive exposure to commodity prices with lower minimum investments and without the complexities of futures or CFDs.

Example of a Gold ETF

You purchase 10 shares of a gold ETF at SGD 70 each, totaling SGD 700. If the ETF tracks gold and gold increases by 10%, your investment value would rise to SGD 770 (excluding management fees and spreads).

Investing in Shares of Commodity-Linked Companies

Instead of direct investment in commodities, you can buy shares of companies involved in their extraction, production, or processing. The performance of these shares often correlates with commodity prices but also depends on company-specific factors (management, costs, etc.). This approach provides indirect exposure and can also generate dividends—something physical commodities do not offer.

Example of Investing in Commodity Shares

You invest SGD 2,000 in shares of a listed mining company. If the price of the commodity (e.g., copper) rises and the company performs well, share price appreciation and dividends could enhance your returns. However, company setbacks can negatively impact performance, despite commodity price trends.

Investing in Physical Commodities

The most traditional route involves buying and holding the physical commodity, most commonly precious metals like gold or silver. This method offers tangible security and can act as a hedge against inflation or currency risk. However, it comes with challenges—secure transportation, storage, insurance, and liquidity. For larger volumes, logistics and verification can become a concern.

Example of Physical Gold Purchase

You buy a 100g gold bar at SGD 9,200 (assuming SGD 92/gram). Storage at a reputable vault costs around SGD 15 per month. If gold rises to SGD 95/gram, your bar is now worth SGD 9,500. Selling may involve dealer fees or bid-ask spreads.

Each method of investing in commodities comes with distinct benefits and risks. Whether you prefer the flexibility of derivatives, the long-term protection of physical assets, or the diversification via ETFs or company shares, understanding each approach helps you align your commodity exposure with your overall portfolio strategy and risk appetite.

Which raw material matches your investor profile?

All commodities do not behave in the same way—some are more volatile, others more stable, and many are influenced by geopolitical or economic events. Choosing the right commodity depends greatly on your experience level and risk appetite. To invest wisely, it is crucial to select assets that match both your financial objectives and your ability to manage risk. Here is a guide to aligning your investor profile with suitable commodities.

🟢 Beginner: Stable and Predictable Commodities

For beginners, it's important to focus on commodities that offer low to moderate price fluctuations, clear market drivers, and accessible investment methods. Gold and aluminium are well-suited to beginner investors for the following reasons:

• Gold:
• Low to moderate volatility; seen as a "safe haven" in times of uncertainty.
• Widely used for wealth preservation and as a hedge against inflation.
• Highly liquid and easy to access via ETFs or low-leverage CFDs.
• Aluminium:
• Generally stable, with demand linked to industrial sectors.
• Less influenced by geopolitical tensions compared to energy commodities.
• Allow exposure to industrial growth without excessive risk.

Recommended Strategies

• Prioritise ETFs for instant diversification and simplicity.
• Choose CFDs with low leverage to manage risk efficiently.
• Avoid frequent trading or day trading until you gain experience and a better understanding of market dynamics.

🟡 Intermediate: More Dynamic Assets Influenced by Current Events

Intermediate investors can consider commodities with higher price movements that are connected more directly to economic news, supply disruptions, or weather phenomena. Oil and grains fall into this category:

• Oil:
• Higher volatility and sensitivity to global economic cycles and supply decisions.
• Impacted by geopolitical factors and inventory data.
• Offers the possibility of greater returns, but requires active management.
• Grains (e.g., wheat, corn):
• Prices influenced by weather events, crop reports, and international trade agreements.
• Seasonal demand and supply patterns create trading opportunities.

Recommended Strategies

• Swing trading (holding positions for several days/weeks) on CFDs or ETFs.
• Use stop-loss orders to limit downside risk.
• Stay updated on economic and geopolitical news to anticipate market movements.

🔴 Expert: Highly Volatile and Sensitive to External Factors

Expert investors can handle commodities that are extremely volatile and heavily influenced by global data, real-time news, and speculative movements. Natural gas, short-term oil trading, and short-term trading in grains are suitable due to their complexity:

• Natural Gas:
• Extremely volatile, with sharp intraday and seasonal fluctuations.
• Highly sensitive to weather surprises, storage reports, and global energy trends.
• Short-term (day trading) oil:
• Requires the ability to interpret inventory reports, futures curves, and geopolitical developments quickly.
• Demands advanced risk management and rapid decision-making.
• Short-term trading in grains:
• Exposed to unpredictable events (weather, policy changes).
• Opportunities from quick market reactions, but can incur significant losses if misjudged.

Recommended Strategies

• Use advanced trading tools like scalping and technical indicators (RSI, MACD).
• Employ dynamic hedging and manage leverage carefully to avoid large losses.
• Monitor the market continuously and be ready to act on short-term signals.

By matching your commodity choices to your investor profile, you increase your chances of long-term success while controlling your exposure to risk. Always start with what you understand best and gradually explore more complex opportunities as your experience grows.

How to choose a broker for trading commodities?

Choosing the right broker is a crucial step for anyone looking to invest efficiently and safely in the commodities market. Your broker will not only provide access to a wide range of commodities—such as energy, metals, or agricultural products—but also impact the security of your funds, your access to useful trading tools, and ultimately your potential returns. Understanding what to look for in a broker will help you make informed decisions and avoid unnecessary risks, especially within Singapore’s regulated financial environment.

Why invest in commodities?

When considering the construction of a balanced investment portfolio, one might wonder about the relevance of commodities alongside more familiar asset classes like equities and bonds. Are commodities simply a speculative asset, or do they offer genuine strategic advantages? With a nuanced understanding, it becomes clear that commodities merit a place in a diversified portfolio, particularly for investors who seek resilience across market cycles.

Commodities often move to the beat of their own drum, displaying price behavior and cycles that can be largely uncorrelated with equities and fixed income. This low correlation arises because commodities are influenced by distinct factors: weather events, geopolitical tensions, technological shifts, and global supply-demand dynamics. As a result, by incorporating commodities into a portfolio, investors can reduce overall volatility and mitigate the risks tied to a single asset class, leading to potentially more stable long-term returns.

Inflation erosion is a key concern for investors, especially in contexts where the cost of living rises rapidly. Here, commodities—especially energy, food products, and industrial metals—offer a natural hedge. During periods of rising inflation, the prices of many raw materials tend to increase, reflecting higher input costs throughout the economy. By holding exposure to these commodities, a portfolio can benefit from this upward pricing pressure, preserving purchasing power more effectively than with traditional assets alone.

Precious metals such as gold and silver are often highlighted for their historical role as safe havens. In times of financial stress, currency devaluation, or geopolitical uncertainty, investors tend to flock to these assets, attracted by their enduring value and liquidity. Allocating a modest portion of a portfolio to precious metals can cushion portfolio drawdowns during turbulent periods, offering an added layer of protection beyond the reach of conventional assets.

Beyond their strategic function, commodities present investors with tactical opportunities as well. The oil market, for instance, is sensitive to shifts in global supply chains, regulatory decisions, and unexpected geopolitical events. These conditions can create pronounced price swings over short and medium timeframes, allowing savvy investors to capture gains linked to these real-world catalysts. Similarly, agricultural or industrial commodities can benefit from secular trends such as technological innovation or evolving consumer habits.

Important information

In summary

Commodities are not a guaranteed path to performance, nor are they free from risk. However, they serve as a powerful tool for diversification, offer potential protection against inflation, provide a haven in times of uncertainty, and present tactical opportunities in response to global events. Building robust portfolios in Singapore or elsewhere involves thoughtful consideration of such strategic assets, balancing their unique benefits against inherent risks for a more resilient investment approach.

How much does commodity trading cost?

Trading commodities can be a rewarding way to diversify your portfolio, but it’s important to understand all the costs involved before getting started. The main types of fees you might encounter when trading commodities include the spread, transaction commissions, overnight financing (swap), inactivity fees, and withdrawal charges. Knowing exactly how each of these costs works can help you make informed decisions and keep your trading as profitable as possible. Let’s break down each fee and see how it can impact your returns.

1. Spread

The spread is the difference between the price a broker is willing to buy (bid) and sell (ask) a commodity. For investors, this cost is often “hidden” because you pay the spread as soon as you open and then close your position.

Example of spread

You decide to trade on gold. The broker quotes a buy price (ask) of USD 2,000 and a sell price (bid) of USD 1,998. If you buy at USD 2,000 and immediately sell at USD 1,998, you have paid a spread of USD 2 per ounce. So, if you trade 10 ounces, your initial cost is USD 20.

2. Transaction commission

Some brokers charge a direct commission every time you buy or sell a commodity. This can be a fixed amount or a percentage of the trade’s value, depending on the broker and the type of account.

Example of transaction commission

If the broker charges a USD 5 commission per crude oil trade, you would pay USD 5 when you buy and another USD 5 when you sell. If you complete 10 trades in a month, that’s USD 100 in commissions.

3. Financing fee (swap)

If you trade commodities using leveraged products (like CFDs or futures) and keep your position open overnight, you will likely pay an overnight financing fee, also known as a “swap.” This covers the cost of borrowing the capital needed for the trade.

Example of financing fee (swap)

You hold a long position on silver overnight. The broker charges a swap fee of USD 1.50 per night for the size of your position. If you hold the position for 5 nights, you’ll pay USD 7.50 in total (USD 1.50 x 5).

4. Inactivity fee

Many brokers charge an inactivity fee if your trading account has no activity (no trades or positions) for a specified period, often a few months. This can erode your capital if you step away for an extended time.

Example of inactivity fee

If you haven't traded for 3 consecutive months, your broker charges an inactivity fee of USD 10 per month. After being inactive for 6 months, you would be charged USD 60 in inactivity fees.

5. Withdrawal fee

You might be charged a fee each time you withdraw funds from your trading account. The amount and structure can vary, but it’s an important cost to factor in when moving profits back to your bank account.

Example of withdrawal fee

Every time you withdraw money from your trading account, the broker charges a USD 3 processing fee. If you make 4 withdrawals in a year, you’ll pay USD 12 in withdrawal fees (USD 3 x 4).

Understanding these fees allows you to better manage your trading strategies and maximize your potential returns when trading commodities. Always review all costs with your broker before starting.

Live commodity prices

What is the taxation on income from raw materials in SG?

The taxation of commodity income in Singapore ("SG") depends on the type of investment vehicle used, such as derivatives, funds, equities or physical metals, and is governed by specific local tax rules. Generally, income from commodities falls under the tax treatment for investment or capital income, with each product category subject to specific provisions regarding taxation, exemptions, and reporting.

Singapore’s tax system is highly favorable for private investors, particularly regarding capital gains. Profits realized from the sale of CFD (Contracts for Difference) and futures are not taxable for individuals, provided these activities are undertaken for personal investment and do not constitute a trading business. However, should the Inland Revenue Authority of Singapore (IRAS) determine that trading is frequent, organized, or resembles a business, such gains may be subject to personal income tax.

For commodity ETFs (Exchange-Traded Funds), price appreciation is treated as a capital gain and not taxable for individuals. If the ETF pays dividends, these may be subject to a foreign withholding tax, depending on the ETF’s domicile. However, once received in SG, such dividends are generally not further taxed for individuals. Residents must make sure that any dividends are classified as foreign-sourced and comply with local reporting requirements if remitting large sums.

Equities, such as shares in mining or oil & gas companies, follow a similar regime. Capital gains from the sale of shares are not taxable. Foreign dividends may be subject to withholding tax by the country of origin, but are usually not taxed in Singapore for individuals unless received as part of carrying out a trade or business.

For physical precious metals, Singapore offers specific exemptions. Investment-grade gold, silver, and platinum (meeting criteria for purity and tradability) are exempt from Goods and Services Tax (GST) and any gains realized by individuals on resale are not subject to capital gains tax. Non-investment-grade or collectible precious metals may be subject to GST at acquisition.

Overall, Singapore remains a highly attractive jurisdiction for investors in commodities due to its non-taxation of personal capital gains, with the main exception being where activities are deemed as trading in the nature of a business. Investors should be mindful of IRAS guidance regarding the boundary between investment activity and trading, as well as compliance with anti-money laundering and reporting requirements for substantial remittances.

Raw materials: understanding the Contango and Backwardation effect

When investing in commodities, understanding the price curve is crucial. This curve compares the current market price (the "spot" price) of a commodity to its prices set for delivery in future months ("futures" prices). The shape of this curve—whether it slopes upward or downward—reveals important information about supply, demand, and the costs tied to holding these commodities over time. Two key configurations dominate: contango and backwardation. Recognising these can help investors make more informed decisions as they indicate where potential gains or losses may arise when trading or investing in commodity products.

Contango: a costlier future than the present

Contango happens when the price of a future contract is higher than the spot price. In other words, the market expects prices to rise over time—or, more precisely, it's more expensive to buy the commodity for delivery in the future than right now. This is common for commodities that can be stored, such as oil or metals.

The main reasons for contango are:

• Storage costs: Keeping a commodity in a warehouse incurs expenses.
• Financing costs: Funds are tied up in holding inventory.
• Insurance and security: Protecting the stored commodity adds to the cost.
• Low immediate demand: Surplus supply can push current prices down, while future prices remain higher due to expectations of stronger demand or lower supply later.

Example: Oil in a surplus market

During periods of excess oil supply—such as in 2020, when demand dropped sharply—oil for immediate delivery became much cheaper than oil for delivery in the following months. Storage tanks filled up, raising storage costs, and driving the market further into contango.

Backwardation: when urgency leads the market

Backwardation is the reverse situation: the futures price is lower than the spot price. This means the market expects prices to fall—or, more often, that there's a current shortage and strong immediate demand. This setup typically signals that buyers are willing to pay a premium to secure the commodity right now rather than wait.

Backwardation often occurs when:

• Supply shortages: Droughts or geopolitical events reduce stock.
• Sudden surge in demand: For instance, due to seasonal needs or political instability.
• Limited storage: Players do not expect to carry inventory forward.
• Producers want to sell fast: A race to offload commodities might keep future prices below today’s price.

Example: Wheat during the Ukraine conflict

When the war in Ukraine began, global wheat supply was threatened. Spot prices surged as buyers rushed to secure immediate shipments, while future prices remained lower, reflecting uncertainty and hopes for a return to normal supply.

Why does this matter for investors?

These market configurations directly affect the returns of financial instruments, such as ETFs or funds that track commodity prices via futures contracts. Most such products don't own the physical commodity. Instead, they continuously "roll" their exposure from a contract nearing expiration to a new future-dated contract.

• In contango, rolling to the next, more expensive contract often results in repeated small losses, which can erode returns over time, even if the spot price is stable.
• In backwardation, the process typically benefits the investor, as rolling over can involve moving into cheaper contracts, creating a potential gain over time.

Understanding whether a market is in contango or backwardation helps investors estimate the hidden cost or benefit embedded in these rollovers.

Summary

Analysing the commodity price curve—spot versus futures—is essential. It provides clues about current supply-demand dynamics, market expectations, and likely pressures on investment performance. Incorporating an understanding of contango and backwardation lets investors anticipate hidden costs or benefits when choosing or managing products tied to commodity futures. This helps in interpreting market signals and refining investment strategies, rather than relying solely on headline prices.

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.