Commodities and Commodities Market
Commodities are raw materials of a wide variety of areas:
Grains – Corn, Soybeans, Wheat
Livestock – Cattle, Hogs
Precious Metals – Gold, Platinum, Silver
Industrials – Cotton, Copper
Softs – Cocoa, Coffee, Sugar, Orange Juice
Energy – Crude Oil, Heating Oil, Natural Gas
The commodities market consists of the trading of forward contracts or futures
contracts; forward contracts are contractual agreements to buy/sell any
commodity between two entities; futures contracts are market agreements to
buy/sell very specific commodities between two entities over a recognized
The most popular way to monitor futures contracts for the generic commodities
market is through an index known as the Commodities Research Bureau (“CRB”)
Index - the most widely followed basket of commodities in the world. The Index
consists of 17 equally-weighted commodities divided into these sectors – grains,
livestock, precious metals, industrials, softs, and energy.
The index was created back in 1957 and since then, there have been nine
revisions to the Index components, the first on April 3, 1961 and the latest on
December 6, 1995.
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