What Is Classified as a Commodity?

Commodities are essential raw materials or primary agricultural products that are commonly traded in global markets. These goods can be categorized into two main types: hard commodities and soft commodities. Hard commodities include natural resources like gold, silver, crude oil, and other metals, while soft commodities comprise agricultural products like wheat, corn, soybeans, coffee, and cotton. The trading of commodities serves as a crucial foundation for global economies, enabling price discovery, risk management, and facilitating international trade.

In the context of commodities law, regulations and legal frameworks are in place to govern the trading, transportation, and storage of these goods. Commodities law aims to ensure fair market practices, prevent market manipulation, and protect the interests of producers, consumers, and investors.

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This area of law is often governed by both national and international bodies to maintain market stability and transparency.

Commodity trading may take place on exchanges, such as the Chicago Mercantile Exchange (CME) or through Over-the-Counter (OTC) transactions. The legal landscape surrounding commodities involves contracts, licensing, inspections, and compliance with regulations issued by government agencies and international organizations.