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Commodities

WHAT ARE COMMODITIES

At its simplest level, a commodity is a basic good or material of a generally uniform quality that is available from multiple producers.

Major commodity markets include agriculture, metal, and energy. Large agricultural commodity markets trade such things as corn, wheat, soybeans, cattle, coffee, sugar and lumber; metal markets include trade of gold, copper, silver, and platinum; and energy markets trade oil, natural gas, and gasoline among other energy-related products.

In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them.

The price of a commodity good is typically determined as a function of its market as a whole: well-established physical commodities have actively traded spot and derivative markets. The wide availability of commodities typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price.

Most commodities are raw materials, basic resources, agricultural, or mining products, such as iron ore, sugar, or grains like rice and wheat. Commodities can also be mass-produced unspecialized products such as chemicals and computer memory.

 

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