What Is Commodities?

Do you ever think about what goes into that cup of coffee you reach for every morning? What about the gas that you use to fill up your tank every week? Most of us never realize it, but virtually all of the goods begin with commodities.

Commodities are an extremely important part of the financial market. That's because they are essential for producers and manufacturers. A commodity is essentially a basic product or raw material used to make all the goods and services that we need in our everyday lives.

There are a wide array of commodities, including oil, gas, coffee, soybeans, and rice. These commodities are traded on commodity exchanges around the world such as the Chicago Mercantile Exchange (CME), the London Metals Exchange, and the Intercontinental Exchange (ICE). Investing in commodities provides investors with a way to diversify their portfolios, especially during times of market volatility.

Want to learn more about this unique part of the market? Keep reading to find out more about the different types of commodities, their price structures, and who sets them on the market.