Commodities can be divided into three different commodity groups: Agricultural or Softs, Metals and Energy.
Agricultural Commodities is a collective term to describe all editable commodities and farming products. These commodities posses a number of unique characteristics in comparison to the other commodity groups, such as limited preservability and highly depended on advantageous weather conditions. Agricultural commodities therefore require specific knowledge when trading them. In general Agricultural commodities refers to grains such as wheat, barley, corn (maize) and oilseeds such as soya and canola. Soft commodities refer to cocoa, coffee, sugar and cotton.
Metal Commodities describes all mined minerals, which are standardized on regulated exchanges. These metals can be divided into two groups: Base Metals and Precious Metals. Base metals comprises all metals which are mainly used for industrial purposes. This includes construction, electronics and the automobile industry. Precious metals are more commonly used as investment tools or to store value in form of jewelry and other decorative items. A specific category in commodity trading of metals is concentrates. Concentrates is the material mostly straight from the mine, where the mined material is composed of multiple metal components such as copper, gold, zinc but also waste material. Concentrates can be traded and are depending on assays where multiple parties measure the actual contents of the mined materials.
Energy Commodities comprises of all commodities supplying the world with some form of fuel, such as Crude Oil, Natural Gas, Coal and Electricity. These commodities have a highly volatile nature and are therefore a very difficult market to safely invest in. Due to world dependence, price movements are difficult to predict as they are not merely influenced by usual market factors but also political motives.