Commodities are natural products that are necessary for our daily lives, such as agricultural produce, energy, metals and other naturally occurring products. There are literally thousands of commodities traded every day in every corner of the globe, ranging from soyabeans, cocoa, coffee, and cattle to crude oil, natural gas, gold, silver and copper.
The oldest and largest commodities exchange of modern times was established in Chicago in 1848 as a central marketplace in which buyers and sellers could come together to trade. The aim was to control price fluctuation and provide stability and liquidity to the farmers, producers, traders, brokers and end users who were involved in the product cycle.
The benefit of trading commodities is that you are dealing with actual products rather than the intangibles of a price on a computer screen. Should you wish, you can take delivery of your product.
Commodities exchanges are highly regulated and each has its own rules and specifications regarding qualities and delivery periods. This provides peace of mind that buyers will receive their goods as specified at the agreed time, and sellers will receive the agreed funds as soon as the transaction is made. This means no errors, no confusion and no missing merchandise.