A commodity is a basic good used in commerce that is essentially uniform across producers, where one unit of a specified size and weight is perfectly interchangeable with another. Most commodities fall within the energy, metals, or agricultural sectors: for example, oil and natural gas; aluminum, copper, gold and silver; or corn, cocoa, cotton, and pork bellies.
Although most commodities are not traded on exchanges, they are critical in all production and manufacturing activities. To be traded on exchanges, a commodity must meet a specified minimum standard for that commodity which is called the basis grade, par grade, or contract grade. Commodity price quotations appear in various formats, but specify currency, unit of measurement, stage of processing, quality, time and place of delivery (e.g., ex works to cost insurance freight (c.i.f.)). Prices may or may not include export taxes and import duties.
This assessment focuses upon commodities that are basic staples or inputs in the production of other goods or services. Although foreign currencies and various financial products are traded on commodities exchanges, they are not a focus of this collections guide.
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