What Is a Commodity Market?
A commodity market is a marketplace for buying, selling, and trading raw materials or primary products.
Commodities are often split into two broad categories: hard and soft commodities. Hard commodities include natural resources that must be mined or extracted -such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestock-such as corn, wheat, coffee, sugar, soybeans, and pork.
Key Takeaways
- A commodity market involves buying, selling, or trading a raw product, such as oil, gold, or coffee.
- There are hard commodities, which are generally natural resources, and soft commodities, which are livestock or agricultural goods.
- Investors can gain exposure to commodities by investing in companies that have exposure to commodities or investing in commodities directly via futures contracts.
- Spot commodities markets involve immediate delivery, while derivatives markets entail delivery in the future.
- Investors can gain exposure to commodities by investing in companies that have exposure to commodities or investing in commodities Directly via future contracts.
- The major U.S. commodity exchanges are ICE Futures U.S. and the CME Group, which holds four major exchanges: the Chicago Board of Trade, the Chicago Mercantile Exchange, the New York Mercantile Exchange, and the Commodity Exchange, Inc.
