for: Commodity (Marxism) A commodity is anything for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, copper is copper. Rice is rice. Stereos, on the other hand, have many levels of quality. And, the better a stereo is, the more it will cost. The price of copper is universal, and fluctuates daily based on global supply and demand..

One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, salt, sugar, coffee beans, soybeans, aluminum, rice, wheat, gold and silver.

Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.

Etymology

Commodity trade

Main: Futures exchange In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer are considered equivalent. It is the contract and this underlying standard that define the commodity, not any quality inherent in the product.

Commodities exchanges include:

• Chicago Board of Trade
• Kansas City Board of Trade
• Euronext.liffe
• Kuala Lumpur Futures Exchange
• London Metal Exchange
• New York Mercantile Exchange
• Multi Commodity Exchange
• Dalian Commodity Exchange

Markets for trading commodities can be very efficient, particularly if the division into pools matches demand segments. These markets will quickly respond to changes in supply and demand to find an equilibrium price and quantity. In addition, investors can gain passive exposure to the commodity markets through a commodity price index.

See also

• List of traded commodities
• Commodity fetishism
• Commodity markets
• Commodity money
• Commodity price index
• Trade
• Jim Rogers (commodities expert)
• Trading Places - comedic film about playing the commodity markets

External links

• Historical Commodity Prices, indexmundi.com.
• Technical Analysis of Commodity Charts, market-analyst.com.