Generally speaking, any tangible good can be categorized as a commodity. A commodity is typically a bulk good such as gold, silver, natural gas, and oil. A commodity may also be a bulk food product like grain, oats, corn, beef, pork bellies, and coffee. Traditionally, a commodity was merely a good, subject to sale or barter. Today however, a commodity can also represent an investment vehicle. One example is commodity futures. A commodity is traded at the commodities exchange. Commodities exchanges not only facilitates the commodity trade, but also establishes and enforces rules and regulations pertaining to the commodity trading process. Depending on its use and trading purpose, a commodity may come in two types – cash commodity and spot commodity. A cash commodity is an actual commodity that is under a futures contract. A spot commodity, on the other hand, is one that is traded on a spot market, pending delivery. |
