What Is a Commodity Market?
A commodity market is a marketplace for buying, selling, and trading of primary products.
Commodities are categorized into two:
hard and soft commodities. Hard commodities include natural resources that are mined or extracted—such as gold, rubber, and oil, whereas soft commodities are agricultural products or livestocks.
Types of Commodity Markets
Generally speaking, commodities trade either in spot markets or derivatives markets.
Spot commodities markets involve immediate delivery, while derivatives markets entail delivery in the future.
Commodities are predominantly traded electronically; however, several U.S. exchanges still use the open outcry method. Commodity trading conducted outside the operation of the exchanges is referred to as the over-the-counter (OTC) market.