Commodities trading is a trading strategy that focuses on physical goods used in the production of other goods and economic services. Goods that are commodities exhibit common characteristics such as a lack of differentiation and fungibility.
Common commodities include:
Commodities comprise a significant portion of production costs for industrial organizations. As such, companies seek to control their costs and manage financial risk by employing commodities trading strategies. Commodities are traded in the spot market or packaged as derivatives and traded over the counter or on exchanges. Managed futures funds and commodities trading advisors (CTAs) are active investors in this asset class.