Many investors are beginning to focus on the commodity investment sector, but it is essential to fully understand the nature of these assets before getting started. This guide will provide an in-depth explanation of the definition, classification system, trading methods, and key risk factors of commodities to help beginners build a solid foundation.
What is a Commodity? Core Concept Explanation
A commodity is a basic raw material used either to produce other products or for direct consumption. Simply put, these are the raw materials we need in daily life—from tangible goods like coffee, sugar, and copper to energy products like crude oil and natural gas.
These commodities are typically classified into two categories:
Two Major Categories of Commodities
Soft Commodities: Agricultural products derived from planting or breeding. They are characterized by limited shelf life and susceptibility to spoilage, such as coffee beans, cocoa,