• A commodity is a basic commodity used in trade that is interchangeable with other goods of the same type.

  • Goods are most often used as inputs for the production of other goods or services.
  • Investors and traders can buy and sell commodities directly on the spot (cash) market or through derivatives such as futures and options.
  • Hard commodities are energy and steel products, while soft commodities are often agricultural commodities.
  • Ownership of commodities in a wider portfolio is encouraged as a hedge against inflation.