Risk Warning: Your Capital is at Risk.
Commodities are the raw building blocks of the world economy. From oil and corn to gold and lithium, they trade in vast, liquid markets where price—not provenance—matters most.
Contents
Why commodities matter
Producers hedge. Traders speculate. Consumers—from airlines to bakeries—lock in costs. Learning how these markets work helps investors ride cycles and avoid hype.
Quick fact: In 2024 futures contracts worth US $28 trn changed hands on the CME alone.Major categories
Most commodities fall into four baskets:
- Agriculture – corn, coffee, wheat
- Energy – crude oil, natural gas, gasoline
- Metals – gold, copper, aluminium
- Environmental & Emerging – carbon credits, cryptocurrencies
Agricultural highlights
Corn feeds livestock and, increasingly, cars. Coffee supplies hinge on a handful of tropical producers. Wheat still provides a fifth of the planet’s calories.
Energy movers
Oil remains the economy’s lifeblood, but gas is the swing fuel for power grids. Traders watch US shale rig counts, OPEC quotas and LNG cargo flows.
Metals in demand
Gold is insurance against turmoil, copper the wiring of the energy transition. Prices move with real rates, construction data and Chinese demand.
Cryptocurrencies
Bitcoin, Ethereum and their peers trade like digital commodities—scarce, fungible and prone to booms and busts.
What moves prices?
- Growth: Rising GDP means more steel, beef and fuel.
- Dollar strength: Commodities are priced in greenbacks; a stronger dollar often pushes prices down.
- Substitution: High sugar prices spur demand for corn syrup.
- Weather & shocks: Droughts lift grain prices; wars disrupt energy flows.
How to gain exposure
- Physical ownership: bullion or delivered barrels (rare for retail traders).
- Equities: buy miners, drillers or processors.
- Futures & options: the purest play but highly leveraged.
- ETFs & ETCs: one‑click baskets of futures or stored metals.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Here’s a summary of which brokers are available in …
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Further reading
- Energy commodities explained
- Trading precious metals
- Guide to cryptocurrencies
- Why agriculture still matters
FAQs
What is a commodity?
An interchangeable raw material—think oil, wheat or copper—whose price is set in large, liquid markets.
Are cryptocurrencies commodities?
In the United States, regulators treat major cryptocurrencies as commodities even though they lack physical form.
How can I start trading?
Read our beginners’ guide, open a demo account with a regulated broker, and practice risk management before using real money.
Credits: Original article by Lawrence Pines, updated by Commodity.com editors.
