What is a commodity?

Commodity in the word means goods or primary goods, according to definitions; commodity is a good that has the ability to trade with similar goods. These goods are generally raw materials of industries. Commodities are traded in the commodity market every day as a raw material for all the goods that humans use in their daily lives and as an asset. The price of commodities is important for the economy because it directly affects the price of final goods.

All kinds of commodities

1– Hard commodity

Hard commodities include oil, gold, etc. These commodities exist naturally in nature.

2– Soft commodity

Another category, such as corn, soy, wheat, etc. They are considered soft commodities. This category of commodities can be placed in the category of agricultural products. Agricultural products are highly sensitive to climate and weather changes, and that is why we always see seasonal price cycles in this market.

3– Commodity of basic metals

Other important types of commodities are basic metals such as steel, copper, aluminum, zinc, etc. Oil and oil derivatives are also included in the sub-branch of the energy market. Also, the market of precious metals such as gold and silver are also under the category of commodities.

Because commodities, especially oil, wheat, iron and aluminum are the main components of common goods, they play an important role in the economy and their price changes affect the entire world economy.

Factors affecting the commodity market

• Supply and demand of goods
• The amount of production, limitations and obstacles in the way of the main producers in the world
• Dollar index
• Changes in stocks or inventory of goods
• Monetary and financial policies of governments and the central bank of countries that are effective in global commodity trade
• Important economic indicators of the countries affecting the world trade of commodities