Understanding Commodities: A Practical Guide for Beginners

Commodities - More Than Just Raw Products

If you want to understand how the global market works, you need to know what commodities are. Basically, we are talking about standardized physical goods that move the world—from the oil that fuels your cities to the gold that ensures financial stability. Commodity trading is not limited to simple buy and sell transactions; it usually occurs through futures contracts, where parties agree to exchange these products at a predetermined price on a future date.

Two Main Categories: Hard and Soft

There are two fundamental types of commodities you should know. Hard commodities include natural resources that require mining or extraction—gold and oil are classic examples. Soft commodities cover agricultural and livestock products—such as corn and coffee, beef, and dairy.

Practical Examples of Commodities

To better visualize, here are the main groups:

Energy Sector (hard category):

• Crude oil and its derivatives
• Natural gas in different forms

Metals and Minerals (hard category):

• Gold, silver, and copper
• Aluminum and other industrial metals

Agricultural Products (soft category):

• Sugar, corn, and coffee
• Wheat and other crops

Animal Derivatives (soft category):

• Livestock and meat
• Milk and dairy products

Knowledge about commodities is essential for those who want to follow market trends and understand global economic fluctuations.