What is a commodity? You may have heard the term "commodity" at one point or another in your life time.
It's a term that is thrown around in the financial industry, and was created back in the 15th century to describe a benefit or profit.
Today, commodities are known as certain valuable goods produced in large quantities with uniform quality across the board.
Commodities are in demand, come from the earth and maintain a consistent price.
For example, Copper is copper no matter where it comes from or what company produces it.
On the other hand, a television varies in price based on type, size, brand, and quality.
A commodity like copper is universal across the board and its price is based solely on supply and demand.
The main difference with manufactured products and commodities is that there is no product differentiation to dictate price.
Other examples of commodities include milk, orange juice, pork bellies, wheat, beef, coal, crude oil, sugar, coffee, rice, silver, gold, and platinum to name a few.
There are both hard and soft commodities, where hard commodities are typically those extracted through mining and soft commodities are grown.
Additionally, energy commodities are another class and include gas, oil, coal and electricity.
Commodities can be traded on a daily bases on several exchanges, such as the CBOT, CME, KCBT, and NYMEX.
Commodities are attractive to traders because they can be very efficient with actual supply and demand to find an equilibrium price based on inventories, where equities have greater chance of being subject to manipulation.
It's a term that is thrown around in the financial industry, and was created back in the 15th century to describe a benefit or profit.
Today, commodities are known as certain valuable goods produced in large quantities with uniform quality across the board.
Commodities are in demand, come from the earth and maintain a consistent price.
For example, Copper is copper no matter where it comes from or what company produces it.
On the other hand, a television varies in price based on type, size, brand, and quality.
A commodity like copper is universal across the board and its price is based solely on supply and demand.
The main difference with manufactured products and commodities is that there is no product differentiation to dictate price.
Other examples of commodities include milk, orange juice, pork bellies, wheat, beef, coal, crude oil, sugar, coffee, rice, silver, gold, and platinum to name a few.
There are both hard and soft commodities, where hard commodities are typically those extracted through mining and soft commodities are grown.
Additionally, energy commodities are another class and include gas, oil, coal and electricity.
Commodities can be traded on a daily bases on several exchanges, such as the CBOT, CME, KCBT, and NYMEX.
Commodities are attractive to traders because they can be very efficient with actual supply and demand to find an equilibrium price based on inventories, where equities have greater chance of being subject to manipulation.