Commodity

A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are often categorized into two types: hard commodities, which are natural resources that are mined or extracted (such as gold, oil, and natural gas), and soft commodities, which are agricultural products or livestock (such as corn, wheat, coffee, and pork).Commodities are typically standardized and traded on exchanges, and their prices are determined by supply and demand dynamics in global markets. The trading of commodities allows for hedging against inflation and risks associated with price volatility. Commodities can also serve as essential goods in economies, used across various industries for production and as raw materials.In finance, commodities can be traded using futures contracts, which are agreements to buy or sell a specific quantity at a predetermined price at a future date, enabling investors and producers to manage price risks.