Commodities: The Complete Guide

What Is a Commodity?

A commodity is a raw or minimally processed material that is interchangeable with another unit of the same good from a different producer. A barrel of WTI Crude from Texas is effectively identical to another barrel of WTI Crude — which is why you can trade them on an exchange without inspecting each one individually. That interchangeability is the defining feature that separates commodities from manufactured goods or company shares.

Commodities sit at the very start of the production chain. Steel cannot exist without iron ore; bread cannot exist without wheat; a smartphone cannot exist without copper and lithium. Because of that foundational role, commodity prices feed directly into the prices of almost everything else — which is why economists and central banks watch them so closely when measuring inflation.

You can browse live commodity prices across all three families on our commodities data page.

The Three Commodity Families

Markets conventionally divide commodities into three broad groups: energy, metals, and agriculture. Each group has its own exchanges, contract sizes, seasonal rhythms, and price drivers. Understanding which family a commodity belongs to is the first step toward reading its price movements.

Energy

Energy commodities include crude oil, refined products such as gasoline and heating oil, natural gas, and increasingly, carbon allowances. Crude oil is the world's most actively traded commodity, and it comes in two main benchmark grades: Brent Crude, priced in London and used as a global reference, and WTI Crude, priced at Cushing, Oklahoma, and used as the US benchmark. Our guide on crude oil goes deep on the differences between them.

Natural gas is priced regionally in ways that oil is not — the US benchmark is Henry Hub in Louisiana, while European gas trades under the TTF contract in the Netherlands. Energy prices are notoriously sensitive to geopolitics, weather, and the production decisions of OPEC and OPEC+, the cartel of major oil-exporting nations.

Metals

Precious metals — gold, silver, platinum, and palladium — are valued partly for industrial use and partly as financial assets. Gold in particular has a centuries-long history as a store of value and a safe haven in times of economic or political stress. Our gold guide explains why it behaves differently from almost every other commodity.

Base metals such as copper, aluminum, zinc, nickel, and lead are primarily industrial raw materials. Copper is especially watched as an economic barometer — because it goes into wiring, plumbing, and electronics, its demand rises and falls closely with global manufacturing activity. Most base metals trade through the London Metal Exchange (LME), the world's main marketplace for industrial metals.

Agriculture

Agricultural commodities split into grains (corn, wheat, soybeans, rice), soft commodities (coffee, cocoa, sugar, cotton), and livestock (live cattle, lean hogs). These markets are heavily influenced by weather, planting cycles, and government policy — a drought in a major growing region can send grain prices sharply higher within days. The agricultural commodities guide covers their seasonal rhythms in detail.

Major Commodities at a Glance

The table below shows the most widely tracked commodities, the unit their price is quoted in, the main exchange where they trade, and the standard contract size. Understanding the unit is critical — misreading "per barrel" as "per gallon" changes the number by a factor of 42. For a deeper look at every unit convention, see Barrels, Bushels and Troy Ounces.

How Commodities Trade: Futures Markets

Most commodity prices that appear in the news — and on data sites like this one — are futures contract prices, not the price of a physical bag of wheat or drum of oil sitting in a warehouse. A futures contract is a legally binding agreement to buy or sell a specific quantity of a commodity at a set price on a specific future date. The futures contract guide explains the mechanics step by step.

The actively traded contract closest to expiry is called the front month. When it expires, traders who do not want physical delivery roll their position into the next contract. The relationship between today's price and future-dated contract prices forms the futures curve — which can be upward sloping (contango) or downward sloping (backwardation). The shape of that curve carries real information about supply and demand expectations, as our guide on contango and backwardation explains.

Alongside the futures price, there is a spot price — the price for immediate delivery of the physical commodity. Spot and futures prices are closely related but rarely identical, because futures reflect storage costs, financing, and the time value of holding the physical good until delivery.

Who Trades Commodity Futures?

Two broad groups participate in commodity futures markets. Commercial hedgers are producers and consumers — an airline locking in jet-fuel costs, or a grain exporter fixing a price months before harvest. Hedging is the practice of using futures to reduce the risk of adverse price moves in the physical market. Speculators — including commodity funds and individual traders — take the other side, providing liquidity and accepting the price risk that hedgers want to transfer.

Commodities vs Stocks: A Fundamental Difference

A share of stock gives you a claim on a company's future earnings. Those earnings can grow, the company can pay dividends, and analysts can build detailed financial models to estimate what the stock is "worth." Commodities offer none of that. A barrel of oil does not earn revenue or pay a dividend. Its price is determined almost entirely by physical supply and physical demand.

This has a practical consequence: commodity markets tend to mean-revert over long periods, because a high price eventually encourages more production and destroys demand, bringing the price back down. Stocks, in contrast, can theoretically compound in value indefinitely if the underlying business keeps growing. This is one reason commodities behave differently from equities in a diversified portfolio — they often respond to different forces at different times.

Storage also matters in a way it simply does not for financial assets. You cannot store a barrel of crude oil in a digital account — you need physical tanks, and tanks have a finite capacity. When storage filled up during the demand collapse of the COVID-19 pandemic, WTI crude oil futures briefly traded below zero in April 2020, meaning sellers were effectively paying buyers to take oil off their hands. That episode, extraordinary as it was, illustrated just how physical commodity markets really are at their core.

Commodities and Inflation

CPI, the Consumer Price Index that statisticians use to measure inflation, is built in large part from the cost of goods that depend on commodity inputs. Energy prices feed directly into gasoline and utility bills, which are significant components of most household budgets. Food prices are driven by grain and livestock markets. Industrial metal prices flow through to manufactured goods over time.

When commodity prices rise sharply and broadly — what economists call a commodity price shock or supply shock — central banks face a dilemma: the higher prices push inflation up, but raising interest rates to combat that inflation can also slow economic growth. The stagflation episodes of the 1970s, driven largely by oil-price spikes, remain the most studied example of this tension.

This is why central banks, finance ministries, and investors all monitor commodity markets as a leading signal for inflationary pressure. You can track those signals alongside scheduled economic releases using the economic calendar.

Commodities and Producing Countries

For many countries, one or two commodities represent the majority of export earnings. Saudi Arabia and Russia depend heavily on oil revenues. Chile and Peru are among the world's largest copper producers. Brazil dominates global soybean and coffee exports. When the price of a country's key export commodity falls sharply, its government revenues, currency, and economic growth can all come under pressure simultaneously.

This concentration of economic risk is why commodity prices are integral to understanding emerging-market currencies. The Australian dollar, for instance, is historically sensitive to iron ore and coal prices; the Canadian dollar moves with crude oil. Economists describe these as "commodity currencies" because the link between the commodity price and the exchange rate is unusually strong and durable.

To explore what actually moves commodity prices — from OPEC production cuts to harvest reports to dollar strength — see our guide on What Moves Commodity Prices. For a deeper dive into any individual market, the crude oil, gold, and agricultural commodities guides each cover their market in full. Live prices, percentage changes, and historical charts for every major commodity are available on the commodities data page.