A commodity is a raw material that can be used to produce other finished goods.
A raw commodity cannot be consumed in the form that it is sold on commodity exchanges.
For example, coffee, which is one of the most traded commodities in the world, cannot be simply picked from a plant and put into a cup.
Coffee needs to go through a complicated process before the beans (whole or ground) are ready to be used in a cafe or sold in a store.
How coffee beans are processed is what distinguishes different brands.
As it is sold on exchanges, coffee is cleaned, dried and packaged in sacks.
For the commodities exchange market to function, all producers must work to the same standard.
A barrel of crude oil produced by ie ExxonMobil and/or Chevron should be at the same standard, so brokers, exchanges and buyers are indifferent to the source of the commodity.
All exchange-traded products must follow established standards.
There are rules governing the purity of metal alloys and quality of foodstuffs.
As commodities are traded on many different exchanges around the world with varying ticker symbols and contract specifications, it’s tough to really calculate the trading volume.
Also, many commodity deals are done over-the-counter in private agreements.
The ten most traded Commodities in the world are:
Crude Oil, Coffee, Natural Gas, Gold, Wheat, Cotton, Corn, Sugar, Silver, and Copper.