A commodity is a raw material or primary agricultural product that can be bought and sold, such as metals, energy, and agricultural products. Commodities are standardized and interchangeable with other commodities of the same type, meaning that one unit of a commodity is essentially equivalent to another unit of the same commodity. Because commodities are homogeneous and easily transportable, they can be traded on organized exchanges, such as the Chicago Mercantile Exchange or the London Metal Exchange. The price of commodities is determined by supply and demand dynamics in global markets, and they are often used as a hedge against inflation and currency fluctuations. Some of the most commonly traded commodities include gold, silver, crude oil, natural gas, copper, corn, and wheat.
