In the stock market, fundamental analysis tries to identify great companies and determine if they are relatively cheap or expensive. For a commodity such matters have no significance, as commodity contracts are entirely standard and no difference exists in quality or value that can be determined in such a way.

Fundamental analysis of commodities is an analysis of supply and demand. The analyst tries to determine the amount of production that is likely in the future and weigh that up against the amounts that are likely to be in demand. In addition a fundamental analyst needs to be wary of the amounts of the commodity in storage at various repositories around the world, which may be made available in the event of a shortage developing.

When a commodity is in short supply, the demand for the commodity may push up prices dramatically. When a weather forecast suggests that a major harvest may be destroyed by extreme weather the price can be bid up by traders acting on this information, but when the forecast is revised the price can come crashing down just as quickly.

Frozen Concentrated Orange Juice (FCOJ) is said to be the commodity most susceptible to weather changes, the mere hint of a freeze in Florida, the site of the majority of the United States' citrus production can send prices soaring, but once the risk has passed the price usually falls rapidly.

Fundamental analysis of currency movements is usually tied to relative interest rates, though the performance of the stock market and other investments in that country, as well as the general economic outlook of various nations drive exchange rates as investors need to buy a nation's currency in order to invest in that country. Importers and exporters need to buy and sell large amounts of currency to do business with foreign companies.

Some commodities, especially oil are largely tied to political influences. The price of oil is extremely sensitive to the deliberate price manipulations of OPEC and various political demands made by interested parties.

In order for fundamental analysis to be of any use, it is essential to have good access to historical fundamental data as well. The price of copper is influenced by the state of the building market, as plumbing and wiring are significant uses for copper. News that a certain number of houses have been approved for construction, especially in the United States is only useful info if you know the historic averages of house starts and the correlation of housing activity with copper prices. Also you will need to know how much copper is sitting around in such store houses as the London Metal Exchange (LMX) and what the present levels of copper mining are, as well as future intent from producers. Then you must analyse such trends as the replacement of copper wiring by Aluminium and other metals and the tendency for plastic piping to be used in lieu of copper.

After all this analysis is done, even if the statistics are very bullish for copper, this may not lead to any significant price rise in copper, or may even herald a fall, as it is likely that many metals traders around the world have already come to the same fundamental conclusions a while ago, or may have actually been more bullish, in which case the price may actually fall as realties take over from expectations.

A problem with fundamental analysis is that most of the figures that can be found or calculated are really just numerical guesses. Once a number has been calculated there is a very real danger of forgetting the procession of guesses that led to this figure and the number can take on an apparent arithmetical precision unwarranted by the data at hand. Jack Schwager, in his book Fundamental Analysis suggests that the way to overcome false certainty is only to deal in a series of ranges. This approach is very similar to error analysis as practiced by physical scientists, where an uncertainty is added to every figure and the total percentage inaccuracy is summed in the final step. The resulting figure then has attached an appraisal of the accuracy and precision of the data, which may in fact indicate a very large error attached to the number.

Prices for grain futures are set by farmer's planting intentions, yield per acre, forecast weather in growing areas, probability of crop disease, prices of competing commodities, government loans and the current supplies in storage. As the marketplace is now a global institution, these figures need to be calculated for growing areas all over the world.

Prices for meat futures, such as cattle, hogs and pork bellies are a factor of the price of competing red meats, farmer's farrowing intentions, expected litter size, the number of animals currently on feed, diseases (especially highly communicable ones or ones dangerous to humans such as Mad Cow Disease, which severely buffett the market, reducing the supply of meat considerably and also scaring people away from the commodity into other foods).

The data needed to do effective fundamental analysis is rarely found in one place, you will need to do a lot of digging. In the links section of the FAQ there are a number of useful sites for futures analysts, with vast amounts of data on hand. They are certainly not light reading but somewhere in the web sites for the United States Department of Agriculture, U.S. Geological Survey, U.S. Department of Commerce, the Federal Reserve and other sites lies all the information you need, as long as you know what to do with it.