Definition of ‘Commodity Market’
Commodity market refers to markets that trade in primary rather than manufactured products. Commodities are hard assets ranging from wheat to gold to oil. Since there are so many, they are grouped in three major categories: agriculture, energy and metals.
A physical or virtual marketplace for purchasing, selling and trading raw or primary products. For investors’ purposes there are currently concerning fifty major commodity markets worldwide that facilitate investment trade in nearly a hundred primary commodities.
Commodities are split into two varieties: onerous and soft commodities. Laborious commodities are typically natural resources that has got to be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural product or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.)
There are numerous ways that to speculate in commodities. An investor can purchase stock in corporations whose business relies on commodities costs, or purchase mutual funds, index funds or exchange-traded funds (ETFs) that have a concentrate on commodities-related corporations. The most direct manner of investing in commodities is by buying into a futures contract.
In business, commodities can be defined as any good or service that is bought and sold purely on price. These include the traded commodities, but can also include products that are not very differentiated from others based on brand, benefits or other distinguishing features. For example, Coca-Cola is a branded product that receives great loyalty, and a higher price, because of it’s perceived differentiation from other cola drinks. A low-cost store brand is more of a commodity, because it isn’t much different from other store brands and is bought primarily because of its low price, not its taste.