Understanding the Basics of Commodities

The simplest answer to the question what are commodities is - commodities are the raw ingredients or components of almost everything we consume or use in our everyday life. Some of the most common commodities are corn, wheat, gold, silver, copper, oil, gas, cattle, sugar, coffee and cotton.

The purpose of commodity exchanges is to provide a centralized marketplace where commodity producers (commercials) can sell their commodities to those who wish to use them for manufacturing or consumption. The beauty of a commodity futures exchange is that someone like a corn farmer can lock in a price for his crops months before they are even...

It might not make sense to many people that only a chosen few commodities trade on futures exchanges, while many other commodities do not. The basic answer is that many commodities have no major economic reason to trade on an exchange and it simply is not practical for others to be listed. Below is an explanation of why some commodities are...

A derivative is a financial instrument or security that is based on the price of another asset, which is called the underlying asset. Derivatives are often highly leveraged instruments and the most commonly types are futures and options.

The Dow Jones - AIG Commodity Index is a diversified measure of the commodities futures markets.

The Rogers International Commodities Index measured the global price level of commodities.

What is the Continuous Commodity Index (CCI Index) and what commodities make up the index? The CCI Index date back to 1957 and was formerly known as the CRB Index.

The main features of futures contracts to learn are ticker symbols, futures contracts, contract sizes, delivery months and price quotes.

You will likely want to check quotes and examine charts if you are interested in trading commodities. There are several free sources online where you can check delayed or real-time quotes and charts.

What are the differences between commodities and a futures contract?

Futures Margin has many different meanings in futures trading and includes initial margin, maintenance levels, margin call and why margin changes.

Several online sources provide futures quotes and charts. Three of the top sources for futures quotes are discussed.

Commodities trade on regulated futures exchanges including the Chicago Board of Trade, Chicago Mercantile Exchange, New York Mercantile Exchange and ICE Futures.

The main features of futures contracts to learn include ticker symbols, futures contracts, contract sizes, delivery months and price quotes.

An in-depth publication from the Chicago Mercantile Exchange that covers most of the basics of futures trading.

Selling a commodity is just as simple as buying a commodity. Here is a simple explanation of why and how commodity traders can make money selling commodities.