WHAT IS THE COMMODITIES MARKET?

In the world of business, a commodity is an undifferentiated product whose market value arises from the owner’s right to sell rather than the right to use. Example commodities from the financial world include oil (sold by the barrel), electricity, wheat, bulk chemicals, pork-bellies and orange juice. More modern commodities include bandwidth, RAM chips, and negative commodity units like emissions credits.

In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers and the items from each different producer are considered equivalent. It is the contract and this underlying standard that define a commodity, not any quality inherent in the product. The commodity market then can be described as a place where raw or primary products are exchanged.

The major groups of commodities are:

• Energy
• Precious Metals
• Softs
• Industrials
• Rare Metals
• Metals
• Grain & Oil Seeds
• Wood & Rubber
• Livestock & Meat