Commodity Market

Diversify your portfolio beyond traditional investments

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.

1

Investors can gain exposure to commodities by investing in companies that have exposure to commodities or investing in commodities directly via futures contracts.

2

There are hard commodities, which are generally natural resources and soft commodities, which are livestock or agricultural goods.

3

Spot commodities markets involve immediate delivery, while derivatives markets entail delivery in the future.

4

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.