Trader's Glossary

Commodity

Commodities are goods of standardised quality and quantity that are traded over an exchange. Commodities fall into two broad categories: hard commodities such as crude oil, gold, silver and platinum that are extracted from the earth, and soft commodities such as wheat, corn, coffee and sugar that are cultivated and harvested. The standardisation of commodities, also known as a basis grade, ensures that regardless of where a commodity originates from, it will be of a standard quantity and above a minimum quality so as to make it interchangeable with the same product from all other producers trading on a given exchange.