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Commodity

Posted by Svetlana Tokunova
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is a product for which there is demand and which is sold without qualitative differentiation across a market. The term commodity generally refers to physical goods that constitute the building blocks of more complex products. Commodity prices are determined as a function of the market as a whole.

Commodities can be traded in two separate, but related, markets: the cash (spot) market and the futures market. The cash market refers to the trading of physical commodities. In a cash market transaction the price agreed upon (spot price) and the exchange of the products occur in the present. The futures market deals with the trading of future obligations to make or take delivery at a future date, instead of the actual commodity. They are traded on commodity exchanges.

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