What is a Commodity?

by Jun 29, 2020Trading Guides

What is a Commodity?

Commodities (Specifically, “Hard” Commodities) are generally regarded as a input in the production or use for other goods or services. Generally, a commodity has the similar/same characteristics, regardless of the location it is harvested in. In this example, West Texas Intermediate (WTI) is a type of crude oil primarily traded on the New York Mercantile Exchange (NYMEX), although any oil produced which have the right characteristics can be considered as WTI.

Hard Commodities are not to be confused with Soft Commodities which share similar characteristics in being relatively homogeneous such as rice, wheat, and cattle. The difference between hard and soft commodities consist of how its produced, with hard commodities such as oil and gold being non-renewable and soft commodities, mainly agricultural products, must be grown and cared for.

 

 

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