Articles on: Primary Commodity Prices

How Intratec uses official foreign trade statistics

How Intratec uses official foreign trade statistics to calculate prices



Prices are based on wide sets of trade transactions effectively concluded, and are representative of volume-weighted average prices of commodities grouped under the same commodity code by the trade statistics source.

Intratec gathers and reconciles foreign trade statistics released by several countries worldwide and reconciles them into databases, from which prices are derived.

Foreign trade comprehends all international exports and imports that take place in a country. Each country compiles its own foreign trade data. However, all of them follow the same publication pattern. Foreign trade statistics do not cover individual transactions, i.e., there are no data about specific shipments prices, sellers, or purchasers. Rather, they cover total monthly quantities and total monthly values summarized by a commodity code.

Thus, prices derived therefrom have two main characteristics:

Prices are based on wide sets of trade transactions effectively concluded
Prices are representative of volume-weighted average prices of commodities grouped under the same commodity code by the trade statistics source.

1) About Trade Transactions Effectively Closed



Trade statistics include transactions according to the date the commodity is shipped (for exports) or unloaded at destination (for imports). Such date frequently differs from the date the deal was closed – for long-term contracts, such difference is clear.

In a given period of analysis, concluded transactions are ruled by distinct contracts closed at different periods in the past.

That means prices derived from trade statistics are an average of prices agreed in all contracts under which commodities have been traded during the period of analysis (including both transactions in the spot market and ruled by long-term contracts). Those average prices are weighted by the volume of each transaction.

Therefore, prices presented in Intratec Primary Commodity Prices cannot be directly compared to either spot prices or contract prices (unless otherwise clearly specified). If you are not familiar with these terms, please see our methodology

2) Understanding Volume-Weighted Average Prices of Commodities



Exporters and importers are obliged to report their transactions to local custom authorities. When they do, they must associate the traded commodity with a code. Such codes are standardized by the custom authority and may often include different commodities or different grades of a commodity.

Trade statistics do not provide information regarding specific differences in the commodities grouped under the same code.

Some commodities can be traded with distinct specifications (different grades), but all of them grouped under the same code.

In such cases, prices derived from trade statistics constitute average prices of all grades grouped under the same code. That average is weighted by the quantity traded in the period of analysis.

Updated on: 01/31/2023