Commodity - Commodity Trade

Commodity Trade

In the original and simplified sense, commodities were things of value, of uniform quality, that were produced in large quantities by many different producers; the items from each different producer were considered equivalent. On a commodity exchange, it is the underlying standard stated in the contract that defines the commodity, not any quality inherent in a specific producer's product.

Commodities exchanges include:

  • Chicago Board of Trade (CBOT)
  • Chicago Mercantile Exchange (CME)
  • Dalian Commodity Exchange (DCE)
  • Global Board of Trade (GBOT)
  • Euronext.liffe (LIFFE)
  • Kansas City Board of Trade (KCBT)
  • Kuala Lumpur Futures Exchange (KLSE)
  • London Metal Exchange (LME)
  • New York Mercantile Exchange (NYMEX)
  • National Commodity Exchange Limited (NCEL)
  • Multi Commodity Exchange (MCX)
  • International Indonesian Forex Change Market (IIFCM)
  • Marché à Terme International de France (MATIF)

Markets for trading commodities can be very efficient, particularly if the division into pools matches demand segments. These markets will quickly respond to changes in supply and demand to find an equilibrium price and quantity. In addition, investors can gain passive exposure to the commodity markets through a commodity price index.

Read more about this topic:  Commodity

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