Would you like to learn more about the commodities market? Then watch the YouTube video “What are commodities markets? Types of contracts, commodities and their use” to learn more on the subject. This market is where raw materials and finished products are bought, sold, or traded. You’ll find that this market facilitates trading in physical goods such as livestock, agricultural products, natural resources, and gas. The video briefly overviews the market, its features, and how commodities law regulates the industry.
What Is a Commodities Market?
Let’s start by looking at what a commodity is. Commodities are basic goods that can be extracted, produced, or grown.
Commodities include crude oil, gold or silver, wheat, corn, or soybeans. These basic goods are essential in making finished products across various industries.
This market is divided into two sub-categories: spot and future markets. A commodity is sold in the former, and the fee is settled immediately. In the latter, the goods will be sold at a future date, and the price will be paid on the specified date and time. You may be curious about how prices for these commodities are determined. The answer is supply and demand. High demand and low supply shoot the price up. Low demand and high supply shoot the price down.
A key point about this market is that it’s global by nature. Therefore, the sale of commodities is influenced by global supply and demand, not geographical supply and demand.