Any good that is mass produced by man or even which exists in nature in huge amounts, which has a value or use and a very low level of differentiation or specialization. They are products whose value is determined by the owner´s right to trade with it, not the right to use it. An example of a “commodity” is wheat on the basis that minimum quality standard does not distinguish between the wheat produced on a farm or another.

Commodities can be classified according to their nature:

• Grains: Soy, wheat, corn, oats, barley.
• Softs: Cotton, sugar, cocoa, coffee, etc.
• Energy: Gasoline, ethanol, oil, gas, crude oil, etc.
• Metals: gold, silver, copper, platinum, aluminum.
• Livestock and livestock products: live cattle, live swine, milk.
• Financial: among them are the 30-year bond, Eurodollar, etc.,the indexes such as the dow jones, the Nasdaq100, etc., and even currencies such as the pound, euro, Mexican peso, etc.

Many financial assets can be considered to be commodities as long as they are not considered as securities, such as currency, interest rate or the benchmark, stock indices, etc..

How are commodities used?

In most cases, in the commodities market you work with forex futures or to a lesser extent the spot market as well. A futures market is one in which the parties that are part of the transaction are committed to complete the transaction at a certain date in future at a fixed price that is agreed on the date. Spot market transactions are conducted and settled on the day or a maximum of 72 hours at a cash price or spot.