Caravans have gold and buy and sell kind of like a player. I have looked in a very detailed way into how the trade and supply and demand works, and only minorly into how caravans work, so I might be off in my caravan analysis, but it's relatively straightforward.
Caravans will go around and buy inventory when it is below the base value of the good, they'll then travel to a nearby city, and sell inventory when it's above the base value of a good.
As a player, think of it as going to cities and buying up things when the number is green and selling when the number is red.
A caravan that does poorly is one that buys up a bunch of inventory that has little demand nearby, so they have little cash to buy more inventory, and no place to offload that for a profit.
There's a few goods that are particularly poor because of the way that the game handles the demand of goods, the ones that I've noticed are real duds are flax and oil. Flax because it is overproduced from farms, there's very low demand from settlements, and the profit from flax is very poor because its base value is only 15 for a weight of 10. Oil because it's super expensive and every settlement has reasonable demand for olives and settlement's artisans will make more than enough oil without an oil presser nearby.
My theory is this; Starting a caravan in Aserai territory, for instance can be poor because the production is very similar across the whole area when it comes to trade goods, mostly grain and flax, there's I think one silver mine, and some horse ranches. So if you start a caravan in Aserai it might fill its inventory with a bunch of flax, beer, linen, etc. Then it might bounce around from town to town where all of the prices for those things are low. They have so much more supply than demand that it will always be cheap so they buy it because it's cheap, but they don't consume it so it stays cheap, so even if the caravan makes a profit it keeps investing it into more cheap dead end goods that few people want.
These things might go over well in Sturgia and Battania, but if the caravan stays in Aserai it will suck. Some other places have more local diversity so even if your caravan pingpongs around between a couple local cities there's big differences between supply and demand between nearby settlements.
Similarly, the most profitable locations to sell relative to the base value is in places with high prosperity. If your caravan bounces between high prosperity settlements, it will buy up things that are in very low demand, which will be things that have been overstocked for some time, but it will frequently be able to find places to sell goods because high prosperity generates higher demand, and higher prices than base.
So lets say flax, a caravan might be happy to buy flax at 14 and sell it at 16 because 15 is the base cost of flax. However, if you're in a place that's a big flax producer with low demand the caravan might buy flax at 8 and be unwilling to sell it to the next city that will pay 12 for it, instead, it might buy it for 14 from that settlement, and go to the next settlement and buy more for 9, and keep going around spending it's budget on cheap flax, not selling it because it can't find a buyer for more than 15. For most goods this will eventually resolve when the caravan finds its way out of this area, but if it loads up on oil it will take a while to find any settlement anywhere that cares about oil.
I'll look into caravan behaviors, this is mostly from observation and what I understand about how the ingame economy works, but I think caravans aren't going to be using too much strategy, and the safest way to ensure they're not making bad deals is to always buy below base price and always sell above base price.
As a player trader, the best things to buy are either workshop goods from areas without a workshop and deliver them to an area with a workshop and little production. Or else buy luxury goods from a low prosperity settlement and deliver them to a high prosperity settlement. You can do OK selling medium highly consumed goods like meat, butter, cheese to medium sized settlements without those production facilities.
Luxuries are things like Dates, Oil, Leather (which is also a component), Wine, Silver (also a component). Velvet and Jewelry are even higher grade luxuries, having 5 times as much demand from high prosperity versus the others mentioned which have 4 times as much. Still, demand for these luxuries is relatively low and the price is relatively high, which results in the price quickly changing when you start to sell them unless the tracked supply value has really bottomed out. Silver and Leather are good, leather is hard to find, but silver is relatively easy to find in abundance in a few places, and cheap because those settlements are low prosperity at the start of the game. Bringing that to a silversmith in a high prosperity town that has run low on silver for a while can be really profitable. Though I'd say most of my profits come from trading things like olives, meat, cheese and butter.
