Trade Commodities (Trade Goods)
A commodity is any uniform group of trade goods that is bought and sold in large volumes and on an exchange. Trade commodities (or, trade goods) are considered to be of some value and are produced in mass amounts. These commodities have a demand, but are supplied without distinction of quality across a market. The market behaves as though it is an equal regardless of who makes it.
Commodities, or trade goods, are the provisions used by almost all consumers. The coffee you had this morning, the bacon in your breakfast, and the gas you put into your car were all most likely exchanged as a commodity at some point in time.
To be considered a commodity, a trade good must satisfy three conditions:
It must be homogenized. Even more, the good must be in its natural condition for any agronomical or manufacturing commodities.
It must be functional upon delivery and remain effective when stored for a period of time.
Its price must fluctuate enough to substantiate selling the item.
Below is a series of traded commodities:
1. Agricultural- eatables, fiber, and grains are trade goods in this group.
Many grain commodities (i.e.…corn, soybeans, wheat) have been trading on future exchanges and have been around for a long time. They are some of the most progressive exchanges to trade.
The Softs-consist of food products and things that are grown. Coffee, cocoa, sugar, and cotton are included in these commodities.
The Hards- these are goods derived through excavating or drilling in mines.
2. Livestock and Meat- these consist of meat agricultural products. They can frequently cultivate some definite trending samples.
Cattle and Hogs are commodities in this group.
3. Energy- these consist of trade goods that are used to power and fuel the nation. These commodities are very popular because of the abundance of witnesses to their uses and prices on a regular basis.
Crude oil, gasoline, heating oil, and natural gas are goods in this group.
4. Metals: Precious and Industrial- Precious metals are often used as an inflation hedge. They are also used for industrial purposes, construction and even photography.
Gold, silver, and copper are examples of these commodities.
5. Other- commodities such as rubber, wool, and palm oil are included in this miscellaneous group.
The top 5 most traded commodities today are as follows:
#1 is Crude Oil.
Coffee comes in second, and is the most frequently traded commodity on the globe. It is more traded than the world’s largest food staple: wheat.
Natural Gas comes in third.
Gold is the fourth most traded good.
Brent Oil is the fifth most frequently exchanged commodity.
Those who exchange commodities establish or at least affect the cost of various trade goods used by people and companies all over the world. Changes in commodity prices can affect entire segments of an economy, and these changes can in turn spur political action (in the form of subsidies, tax changes, or other policy shifts).
