You don’t think about where an ear of corn or a bag of wheat flour was farmed or
milled when you buy them. As a result, they’re both regarded commodities.
They are interchangeable raw materials that can be bought and sold in large
quantities. They are frequently used as components in the production of finished
goods.
Commodities are divided into two categories by investors: hard and soft. Finding
hard commodities necessitates mining or drilling. Soft commodities are
cultivated or grazed. Agricultural products, livestock and meat, energy
products, and metals are the four basic forms of commodities.
Commodity trading is essentially the purchasing and selling of these raw
materials. It usually occurs through futures contracts, in which you commit to
purchase or sell a commodity at a specific price and on a specific date.
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