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A commodity is a basic good or raw material that is interchangeable with other goods of the same type.

Commodities are basic goods that can be interchanged with other commodities of the same type. Some commodities, like agricultural products, have been traded for centuries. More recently, certain digital assets, like Bitcoin, have been classified as commodities by regulatory bodies like the U.S. Commodity Futures Trading Commission.

Commodities are often used as inputs in the production of other goods or services. They are typically divided into two categories: hard commodities, which are natural resources like gold, oil, and natural gas, and soft commodities, which are agricultural products like wheat, coffee, and livestock.

From an accounting perspective, commodities held by a company would typically be considered inventory and would need to be valued correctly for financial reporting purposes.


  • Example 1: Gold, a hard commodity, is mined, traded globally, and used in various industries including electronics and jewelry.
  • Example 2: Wheat, a soft commodity, is grown by farmers and sold to companies that process it into food products.


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