What is a Commodity?
A commodity is a basic raw material or primary agricultural product that can be bought, sold, or traded in large quantities. Commodities are essential goods used in commerce and are generally interchangeable with other goods of the same type.
Key Features of Commodities:
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Standardized & Uniform – Commodities of the same type are nearly identical regardless of producer (e.g., gold, crude oil, wheat).
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Traded on Exchanges – Most commodities are bought and sold on futures markets like the CME Group, ICE, or LME.
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Used in Production – They serve as inputs for other goods (e.g., oil for fuel, wheat for bread).
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Price Volatility – Affected by supply, demand, weather, geopolitics, and economic trends.