What are commodities?
- by Anna K.
Commodity traders are the people who use crudes and other goods of nature to trade then for the goods of the same nature. The most often traded commodities are oil, gas, gold, coffee, tea and others. It is also possible to say that animals, animal products, metals and bio-fuels are commodities.
The basic feature of commodities is that there is no additional value to them. They are basically sold as they are extracted, washed or picked from the Earth. And, of course, commodities can vary in quality and value, but more or less they are similar, and it doesn’t matter who is the producer. Coming from different usage groups, commodities coming from the same group are interchangeable.
There is a possibility to trade futures for commodities as well. Standard amount of commodities used for trading is established by the marketers. For example, oil is sold by the barrels, precious metals by ounces and wheat by 5.000 bushels.