Commodity
Table of Contents:
Definition of Commodity
A commodity refers to a raw material or primary agricultural product that is traded in bulk and standardized in quality.
It is interchangeable with other goods of the same type and is often characterized by its uniformity, fungibility, and widespread use in various industries.
Commodity markets facilitate the buying and selling of these essential resources.
What is Commodity?
A commodity is an essential physical asset or raw material, such as oil, gold, wheat, or coffee, which holds intrinsic value and serves as a foundation for global economic activities.
Commodities are traded on exchanges or over-the-counter markets and play a vital role in supply chains, production, and consumption.
Types of Commodity
Commodities can be categorized into four main groups: agricultural (e.g., grains, livestock), energy (e.g., crude oil, natural gas), metals (e.g., gold, copper), and soft commodities (e.g., coffee, cotton).
Each type serves distinct purposes, from powering industries to nourishing populations or supporting manufacturing processes.
What are examples of Commodity?
Crude oil is one of the examples of commodities. It is a fundamental energy resource, traded globally. Oil's standardization and interchangeable nature enable it to be bought and sold easily.
The price fluctuations impact economies, industries, and consumers worldwide. Governments, investors, and companies engage in oil trading and hedging strategies to manage risks associated with price volatility and ensure stable energy supply chains.
