Commodities

Learn about Commodities with iMinds Money's insightful fast knowledge series. 

A commodity is a tradeable item, which can usually be processed further and sold. This includes industrial goods such as metals; agricultural goods like wheat, wool or sugar; and bulk goods such as iron ore or coal. In their original and simplified sense commodities are uniform in value, meaning it is irrelevant who produces the commodity, as its value will remain the same. For example oil mined by Shell or BP will be worth the same even though it was produced by different companies. Commodities account for the bulk of exports for many nations throughout the world. They are most commonly substances which come from the earth. Hard commodities are extracted from the earth via mining, while soft commodities are grown in the earth. The price of commodities is generally universal and their value remains consistent irrespective of who produces them.

During the 2000s there was a commodities boom as the demand for raw materials grew throughout the world. Developing nations, especially China and India, led this rise in demand. This pushed up the prices for commodities, such as iron ore. During this period many commodities reached an all-time high in terms of cost. Commodity prices have always risen and fallen due to changing conditions, with regards to supply and demand.

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