Commodities are actual things that are usually consumed and used, including metals like gold and silver, grains like corn and soybeans, and fuels like crude oil and natural gas. Various factors including supply, demand, weather, and political unrest can affect their prices.
The commodity markets by far are the oldest markets. Commodities are classified as either hard or soft. Soft commodities include coffee, sugar, cocoa, soybeans and even livestock—things that are grown. Hard commodities are those which are mined or extracted from the earth, such as gold, silver and oil.
Commodities can be traded in many forms, in the cash market, in ETFs, in the stocks of firms that deal in those commodities, and in commodity futures contracts. Sometimes traders will physically exchange the commodity, but more often they will settle the trade for cash or another instrument« Back to Glossary Index