What is a commodity market?
A commodity market is a marketplace where traders can buy and sell primary economic sector goods, either on the spot market or the futures market.
Where have you heard about commodity markets?
If you've ever traded hard commodities (natural mined resources like gold or rubber) or soft commodities (largely agricultural products, like grains or livestock), you've probably done so on a commodity market.
What you need to know about commodity markets.
Commodity markets work worldwide, like the London Metal Exchange and the Toyko Commodity Exchange. The major American commodity markets are the New York Board of Trade and the New York Stock Exchange. Commodity markets also function regionally, as with the Minneapolis Grain Exchange.
As with most financial markets, commodity markets are regulated. In the US, the regulatory board is the Commodity Futures Trading Commission. In the European Union, the Markets in Financial Instruments Directive regulates operations, while the European Securities and Markets Authority sets position limits on commodity derivatives.
Find out more about commodity markets.
The most common method of trade in a commodity market is through a futures contract.