Commodities

Commodities

A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. A commodity thus usually refers to a raw material used to manufacture finished goods.

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Trade Commodities with Traddoo

A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. A commodity thus usually refers to a raw material used to manufacture finished goods. A product, on the other hand, is the finished good sold to consumers.

The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

  • A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type.
  • Commodities are most often used as inputs in the production of other goods or services.
  • Investors and traders can buy and sell commodities directly in the spot (cash) market or via derivatives such as futures and options.
  • Hard commodities refer to energy and metals products while soft commodities are often agricultural goods.
  • Owning commodities in a broader portfolio is encouraged as a hedge against inflation.
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