Commodities, what is it?, and what is its power in the market?

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In recent weeks, the value of the scarcity of raw materials such as oil. A resource, capable of creating the chaos in the production and distribution of essential goods.

When we talk about oil we talk about commodities, a financial term that you may not think you know and that is new to you. However, we are sure that you know that it is a raw material. Therefore, in this post We are going to tell you everything you need to understand the concept of a commodity perfectly. So keep reading!

Commodity meaning. 

Commodities are raw materials, that is, a tangible material that can be traded and whose main potential is its transformation into other goods of greater elaboration and value in the market.

An example of a commodity is oil, a basic input used to produce plastic products.

Commodities market

exist commodity stock markets where metals, food, energy resources and other materials are traded, which are used to manufacture other goods with a higher level of processing.

Commodities are divided into four categories:

  • metals: gold, silver, platinum and copper.
  • Energy: crude oil, heating oil, natural gas and gasoline.
  • Cattle raising: cattle, lean pork and pork belly.
  • Agriculture: corn, rice, wheat, cocoa and coffee.

We can point out gold, silver, copper, platinum and lithium as the main commodities in the metals category; natural gas, as energy; cattle and pigs, such as meat and corn, wheat, rice, sugar, coffee, oats, cocoa, cotton and soybeans, among agricultural products.

One of the most notable characteristics of commodities is their volatility., that is, the fluctuations to which their prices are subject throughout the year.

In the commodity market you can invest as follows: buying shares of the companies themselves who are dedicated to these products, but also buying shares in funds specialized in commodities.

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