Question: What Are Commodities?
Answer: Commodities are hard assets ranging from wheat to gold to oil. They include a lot of agricultural products. This includes:
- Things you drink, such as sugar, cocoa and coffee.
- Grains, such as wheat and corn.
- Animals that become food, such as cattle and pork.
- Things you wouldn't eat, such as cotton.
All these commodities are traded except, for some reason, onions. The primary commodities that are traded are oil, gold and agricultural products. Since no one really wants to transport all those heavy materials, what is actually traded are commodities futures contracts or options. These are agreements to buy or sell at an agreed upon price on a specific date.
The commodities markets are in Chicago (Chicago Board of Trade) and New York (New York Board of Trade, and the New York Mercantile Exchange).
