Commodity

A good which is supplied without qualitative differentiation across a market.

Traditionally a commodity was a physical raw material that was an essential ingredient in a manufactured product. The definition has expanded to encompass manufactured basic industrial inputs such as steel and even intangible rights such as carbon emissions created by legislation rather than by nature.

Physical commodities have historically been categorised as:

1. 'Hard' commodities which are mined or extracted, including metals and oil; or
2. 'Soft' commodities which are grown or reared, such as agricultural products and livestock.

See also

• Commodity risk
• Derivative products