Commodities are objects that come out of the Earth such as Grains, Metals and Oil.
Since there are so many, they are grouped in three major categories: Agriculture, Energy and Metals.
Agricultural commodities include:
- Things you drink, such as sugar, cocoa, coffee and orange juice. These are known as the soft markets.
- Grains, such as wheat, soybeans, soybean oil, rice, oats and corn.
- Animals that become food, such as live cattle and pork (called lean hogs).
- Things you wouldn't eat, such as cotton and lumber.
The Metals includes mined commodities, such as Gold, Copper, Silver and Platinum.
People can buy and sell commodities based on speculation. For the more experienced investor, this venue of investing can offer huge returns with very little initial investment. The risks are tremendous and not at all recommended for the inexperienced investor, but some think the outcome more than makes up for the for potential loss.