Barrels, Bushels and Troy Ounces: Commodity Units

Why Units Matter Before Anything Else

When you look at a commodity price, the number on screen is only half the story. The other half is the unit that number is attached to. A price of 900 means something completely different if it refers to a troy ounce of gold versus a metric tonne of aluminum versus a bushel of wheat.

Unit confusion is also how silly comparisons get made. "Oil is cheaper than water!" sounds provocative until you realize oil is priced per barrel (a large bulk measure) while bottled water is priced per small bottle. The math only works if you use the same unit for both. Getting the unit right is the foundation of reading any market quote correctly.

Oil and Energy Units

The Barrel: 42 US Gallons

Crude oil is quoted in barrels. One barrel equals exactly 42 US gallons — a standard that dates back to the Pennsylvania oil fields of the 1860s, when producers used 42-gallon wooden barrels as a practical shipping container. Today no physical barrel changes hands; the number is just the pricing unit.

The two most-watched benchmarks, WTI and Brent, are both priced per barrel. A standard crude oil futures contract on the CME (Chicago Mercantile Exchange) covers 1,000 barrels — so suppose a barrel is quoted at $80; one contract represents $80,000 worth of oil. That contract size is why professional traders, not individual shoppers, dominate these markets.

MMBtu: Natural Gas

Natural gas is priced in MMBtu, which stands for one million British thermal units. A British thermal unit (BTU) is the amount of heat needed to raise one pound of water by one degree Fahrenheit. Energy markets bundle BTUs into millions because gas moves in enormous volumes.

The US benchmark, Henry Hub, quotes in dollars per MMBtu. A standard Henry Hub futures contract covers 10,000 MMBtu. Because gas is a fuel burned for heat and power, its price is closely tied to seasonality — cold winters drain storage and push prices up, warm winters do the opposite.

Precious Metals: The Troy Ounce

Gold, silver, platinum, and palladium are all quoted in troy ounces — and a troy ounce is not the same as the ounce you use on a kitchen scale. One troy ounce equals approximately 31.1 grams, while a standard (avoirdupois) ounce equals about 28.3 grams. The difference is roughly 10%, which is large enough to matter when you are calculating the value of a gold bar.

The troy ounce system comes from Troyes, a medieval French trading city, and it has been the global standard for precious metals for centuries. Gold prices are quoted in US dollars per troy ounce almost everywhere in the world. A standard COMEX gold futures contract covers 100 troy ounces. Silver futures contracts typically cover 5,000 troy ounces — a reminder that silver is far less valuable per ounce and needs a bigger contract to be worth trading.

Agricultural Units: Bushels, Pounds and Tonnes

The Bushel

Grains such as wheat, corn, and soybeans are quoted in cents per bushel. A bushel is a volume measure, but in practice grain markets use it as a weight standard: one bushel of wheat weighs about 60 pounds, one bushel of corn about 56 pounds, one bushel of soybeans about 60 pounds. The weights differ by crop because grain density varies.

Prices are quoted in cents rather than dollars simply because of tradition and because the numbers are more readable that way — a wheat price of 550 means 550 cents, or $5.50 per bushel. A standard CBOT (Chicago Board of Trade) grain futures contract covers 5,000 bushels. Key crop reports like the WASDE Report (World Agricultural Supply and Demand Estimates) move bushel prices sharply on release.

Pounds for Softs and Copper

Soft commodities — things grown rather than mined — often trade in cents per pound. Coffee, cocoa, sugar, cotton, and orange juice all have their own unit conventions, but pounds are common across several of them. Copper, despite being a base metal, is also quoted in cents per pound on US markets (though the London Metal Exchange quotes it in US dollars per metric tonne).

The two conventions coexist because copper trades actively in both the US and London. Traders comparing prices across exchanges must convert units carefully — dividing the LME tonne price by roughly 2,204 (the number of pounds in a metric tonne) to get a per-pound figure comparable to COMEX quotes.

Metric Tonnes vs Short Tons

Base metals like aluminum, zinc, and nickel trade on the LME in metric tonnes. One metric tonne equals 1,000 kilograms, or about 2,204 pounds. This is the standard used internationally and by the LME for most industrial metals.

In contrast, US agricultural markets sometimes reference the short ton, which equals 2,000 pounds — roughly 907 kilograms. The difference between a metric tonne and a short ton is about 10%, again large enough to cause real errors if the two are mixed up. When reading any commodity price, checking whether "ton" means metric or short is a basic but essential step.

The Full Map: Units, Quotes and Contract Sizes

The table below summarizes the standard unit, how prices are conventionally quoted, and the typical exchange-traded futures contract size for the most widely followed commodities. Contract sizes can vary by exchange and contract type; these reflect the most common benchmark contracts.

Reading Moves Across Units

Because raw price levels are only meaningful within their own unit, the most useful way to compare commodity performance across markets is through percentage changes — the day, week, month, year-to-date, and year-on-year columns you see on data tables. A 5% move in gold and a 5% move in natural gas are directly comparable; a move from 900 to 950 in gold versus a move from 2.50 to 2.65 in natural gas tells you almost nothing without doing the math first. The guide on reading percentage moves explains those columns in detail.

Understanding units also matters when reading the difference between spot and futures prices. The spot price and the futures price are both expressed in the same unit for a given commodity, but the futures price also reflects time, storage costs, and contango or backwardation in the futures curve. Mixing up a spot barrel price with a futures barrel price can produce a misleading picture of where the market actually stands.

The unit is not a footnote. It is part of the price. Every commodity quote is meaningless without it.

For a broader look at how individual commodity markets work — from supply shocks to seasonal patterns — the complete commodities guide covers each market in depth.