Understanding the Commodity Market

DeFiGrayling · 2026-01-04T13:08:26+00:00

Commodity trading involves the buying and selling of basic products essential to the global economy. There are two categories: hard (mining, such as gold and oil), and soft (agricultural products, such as sugar and coffee). Most transactions occur through futures contracts.

DeFiGrayling

2026-01-04 13:08:26

Abstract generation in progress

How Commodity Trading Works

In the business world, commodities are basic products and raw materials that drive the global economy. We are talking about essential resources widely used in industry and agriculture, traded on a large scale in international markets.

Commodity trading occurs in two main ways. In practice, you can trade the physical product directly, receiving the goods concretely. But currently, most transactions happen through futures contracts — an agreement where you commit to buy or sell a specific commodity at a fixed price, with delivery scheduled for a future date.

Classification of Commodities: Hard and Soft

Raw materials are divided into two main categories. Hard commodities include natural resources that require mining or extraction — such as gold, silver, and oil. Soft commodities encompass agricultural and livestock products, including food and animal derivatives.

Practical Examples of Commodities

Energy Resources (Hard): Crude oil and natural gas are pillars of the global energy matrix, with prices fluctuating according to worldwide demand.

Precious and Industrial Metals (Hard): Gold, silver, copper, and aluminum represent value both for investors and industrial processes.

Agricultural Products (Soft): Sugar, corn, and coffee are fundamental agricultural commodities, with seasonal production impacting prices.

Livestock Products (Soft): Cattle, milk, and beef complete the sector’s commodity portfolio.

Understanding these commodity categories is essential for those seeking to understand how global markets operate and the investment opportunities in this segment.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.