Trading commodities is something very popular amongst people. We think we know what the most looked-for commodities are. Maybe you are not sure. Either way in this topic we will discuss the most sought-after commodities and explain why.
What are Commodities?
Commodities are raw materials. Well, that is too generalized. Commodities are goods that are bought and used to make products that are then sold to customers. So yes, commodities can be raw materials that are then turned into products and sold to customers. Here is a detailed guide about commodities.
The idea of a commodity is something, a material that generally does not change much from different providers. So, knowing this we also know that a lot of agriculture products are commodities since they are used to make products and don’t change when received from different providers.
Oil is a perfect example of understanding commodities. An amount of oil, let us say a barrel of oil, does not change that much from another barrel of oil given by somebody else. The same goes for many other products. What changes, in reality, is the product that is made by different producers (e.g. Coca Cola vs. Pepsi).
The traditional set of commodities, some of the most important, used to be gold, beef, oil, etc. However, nowadays in the list of some of the most important commodities, we have financial goods as well.
What do we mean by financial goods? Well, a simple example would be foreign currencies, financial assets, bandwidth, etc. The idea of a commodity has widely changed from what it used to be years ago. So now we will go into more detail and see some of the most sought-after commodities.
The Most Traded Commodities
Down we have a list, in no particular order, of the most traded commodities according to the FIA. First, we will have a list, and after we will discuss every commodity on its own.
- West Texas Intermediate Crude Oil
- Brent Crude Oil
- Natural Gas
- Soybeans
- Corn
- Gold
- Copper
- Silver
West Texas Intermediate Crude Oil
It is a grade of either mixed or crude oil. It is mainly used as a benchmark for today’s prices of crude oil. It has a low density and low sulfur so a lot of times it is named medium crude oil or sweet oil. It is the underlying commodity for NYMEX’s future contracts on oil.
Brent Crude Oil
It is sometimes compared to WTI (West Texas Intermediate Crude Oil) because it too, is a benchmark for oil prices today. It is brought out from the North Sea and it is used for prices and purchases of oil worldwide. It is named light oil due to its low density and sweet due to low sulfur, somewhat the same as WTI.
Natural Gas
By definition, Natural Gas is a fossil energy source that is used for heating, electricity, etc. It is an important commodity since it is used for filling up vehicles or really important products such as plastic and others.
Soybeans
In agriculture, soybeans are a massively exported and produced commodity in the United States of America. The US is the leading producer and exporter of soybeans worldwide.
Corn
Corn is a very important agricultural product. The reason is that it is used for animal feed and the production of ethanol. Since it is an agricultural product its price solely depends on the weather and natural conditions for production.
Gold
Gold has been around for a long time as a commodity. One of the main reasons is its beauty for different types of accessories recorded way back in human history and today. Although today it is also one of the main components in many electronics.
Copper
Just like Gold, Copper is also used a lot in electronics. Its price changes a lot and it is mainly decided by the number of electronics produced and sent out for sale.
Silver
Silver is used as a beautiful metal just like Gold. Although people prefer gold more that doesn’t stop silver from being an important commodity too. See, silver is also used for making solar panels and photographic film as well which is very important for production.
Takeaways
- Trading commodities is something very popular amongst people.
- Commodities are goods that are bought and used to make products that are then sold to customers.
- The idea of a commodity is something, a material, or goods that generally does not change much from different providers.
- The traditional set of commodities, some of the most important, used to be gold, beef, oil, etc.
- What changes, in reality, is the product that is made by different producers (e.g. Coca Cola vs. Pepsi).
