Understanding Commodities in the Global Market

How Commodities Work

Commodities represent essential products circulating through the global economy, from resources extracted from the earth to agricultural harvests. Unlike goods purchased in stores, these commodities move through large-scale commercial channels. Their trading mainly occurs via financial instruments such as futures contracts, where participants set a price today for delivery at a future date.

Two Main Categories

The segmentation of commodities follows a clear logic: hard commodities include resources that require mining or extraction from the natural environment (gold, oil, precious metals), while soft commodities originate from agricultural and livestock production (grains, oilseeds, animal protein).

Practical Trading Examples

Energy Sector (Hard Commodities)

Crude oil and natural gas dominate this segment, fueling industries worldwide.

Metals and Ores (Hard Commodities)

Gold, silver, copper, and aluminum form the basis of industrial and technological production.

Agricultural Products (Soft Commodities)

Sugar, corn, and coffee represent the main commodities in agriculture, with constant demand in international markets.

Livestock (Soft Commodities)

Cattle, milk, and beef form the protein chain that supplies global trade.

Understanding these categories facilitates tracking commodity movements in financial markets.