Every futures contract represents something real: barrels of oil, bushels of corn, an index of stocks, or the future path of interest rates. Fundamental analysis looks at the forces behind that something, mostly supply and demand, to understand why prices move. It's how commercial hedgers think, and it gives chart readers essential context.
It all starts with supply and demand
When supply is expected to tighten or demand to grow, prices tend to rise until enough buyers are discouraged; the reverse pushes them down. The key word is expected. Futures prices reflect what traders collectively expect about the future, not just today's conditions.
What drives each market
| Market | Key fundamentals | Major data sources |
|---|---|---|
| Agriculture | Planted acres, yields, weather, exports, ending stocks | USDA's monthly WASDE and crop reports |
| Energy | Production, inventories, refinery activity, global demand, geopolitics | EIA weekly petroleum and natural gas reports |
| Metals | Industrial demand, mine supply, inflation expectations, the dollar | Economic data and central bank policy |
| Interest rates | Inflation, employment, Fed policy expectations | BLS CPI and jobs data; FOMC statements |
| Stock indexes | Corporate earnings, economic growth, interest rates | BEA GDP, earnings seasons, Fed policy |
| Currencies | Interest rate differences between countries, growth, trade | Central bank decisions in each country |
The "balance sheet" approach for commodities
Commodity analysts often think in terms of a simple balance sheet: beginning stocks plus production and imports, minus domestic use and exports, equals ending stocks. USDA's WASDE report is built around exactly this kind of supply and demand table. When projected ending stocks shrink relative to use, markets tend to treat supply as tighter. Learning to read one WASDE table for one crop is a great first exercise.
Fundamentals in financial futures
For interest rate, stock index, and currency futures, the central fundamental is usually the outlook for interest rates and the economy. Inflation data such as BLS's Consumer Price Index shapes expectations for the Federal Reserve, which meets eight times a year on a published schedule. A surprise in inflation or jobs data can reprice all of these markets within minutes. See the economic calendar for the key dates.
Why prices move before the news
Because futures prices are built on expectations, much of what happens is "priced in" before an announcement. What moves markets is the difference between expectation and reality. This is why prices sometimes fall on seemingly good news, and why reading headlines alone often misleads beginners.
Positioning matters too: if many traders already hold the same view, there may be fewer new buyers left. The CFTC's Commitments of Traders report offers a weekly window into that.
How to start studying one market
Fundamental analysis can feel endless, so narrow it down. Pick one market and learn its handful of key drivers well:
- Learn the product. Read the contract basics in our market guides: what's delivered, the contract size, and the trading hours.
- Identify the two or three numbers that matter most. For crude oil, that might be weekly inventories and refinery utilization from the EIA. For corn, projected ending stocks and the stocks-to-use ratio from WASDE. For interest rate futures, CPI and the Fed's policy path.
- Mark the release dates on your economic calendar.
- Keep a simple log. Write down what was expected, what was reported, and how the market reacted. After a few months, you'll have your own sense of what moves that market.
Seasonality and the calendar of production
Many commodity markets follow annual rhythms. Grain markets pay close attention to planting and growing seasons and to harvest, when supply estimates become more certain. Natural gas demand tends to rise with winter heating and summer cooling. Gasoline demand has its own seasonal pattern around summer driving.
Seasonal tendencies are useful background, but they're tendencies, not rules. A drought, a mild winter, or a shift in exports can override any seasonal pattern. Treat past seasonal behavior as a reason to pay attention at certain times of year, not as a reason to expect a particular price move.
The role of the U.S. dollar
Many global commodities, including crude oil and gold, are priced in U.S. dollars. When the dollar strengthens, those commodities become more expensive for buyers using other currencies, which can weigh on demand, and the reverse can support it. The relationship is far from fixed, but it's one reason commodity traders keep an eye on currency markets and the interest rate outlook that drives them.
Limits of fundamental analysis
- Timing. Fundamentals can explain where a market should head over months while prices go the other way for weeks.
- Revisions. Estimates and data get revised, sometimes substantially.
- Information advantage. Large commercial firms often know their own markets far better than individual traders do.
- Surprises. Weather, policy changes, and global events can override any forecast.
Combine, don't choose
Many traders use fundamentals to understand the "why" and technical analysis to manage the "when" and "where," including stop placement. Either way, risk management has the final word.
Before you trade
Futures are leveraged. A small price move can produce a large gain or loss, and losses can exceed the money in your account. This article is general education, not a recommendation to buy or sell any contract.
- Practice in a simulated (paper) account before using real money.
- Decide your maximum loss per trade before you enter, and size positions to it.
- Confirm current contract specifications and margin requirements with the exchange and your broker.
Common questions
What is fundamental analysis in futures?
Studying the economic forces behind a market, such as supply, demand, inventories, interest rates, and policy, to understand why prices are where they are and what could change them.
Is fundamental or technical analysis better?
They answer different questions. Fundamentals help explain why a market might move; technical analysis helps describe how it is moving and where to manage risk. Many traders use some of both.
Why does the price sometimes fall on good news?
Because prices already reflect expectations. If the news is good but less good than traders expected, prices can fall.
Sources
- WASDE Report — U.S. Department of Agriculture. www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report
- Weekly Petroleum Status Report — U.S. Energy Information Administration. www.eia.gov/petroleum/supply/weekly
- Meeting calendars and information — Federal Open Market Committee. www.federalreserve.gov/monetarypolicy/fomccalendars.htm
- Consumer Price Index — U.S. Bureau of Labor Statistics. www.bls.gov/cpi
- Commitments of Traders — U.S. Commodity Futures Trading Commission. www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm
Last reviewed October 17, 2026. Educational content only; not investment advice. Contract specifications and margins change, so confirm current figures with the exchange and your broker. See our risk disclosure.