What are physical commodities?
Physical commodities are the fundamental raw materials that underpin the global economy. They are traded in vast quantities across the globe. We depend on them for the basics of everyday life for the electricity we use, the food we eat, the clothes we wear, the homes we live in and the transport we rely on.
Primary commodities are either extracted or captured directly from natural resources. They come from farms, mines or wells (e.g. crude oil).
Secondary commodities are produced from primary commodities to satisfy specific market needs (e.g. crude oil is refined to make gasoline).
Agricultural commodities include grains and oilseeds (corn, soybean, oats, rice, wheat), livestock (cattle, hogs, poultry), dairy (milk, butter, whey), lumber, textiles (cotton, wool) and softs (cocoa, coffee, sugar).
Primary energy commodities such as crude oil, natural gas, natural gas liquids, coal and renewables are refined and processed into many different petroleum products and fuels, from bitumen to gasoline, biodiesel and LNG (liquefied natural gas).
Metals & Minerals
The major base metals mined are iron ore, copper, aluminium, nickel, zinc and lead. Iron ore is left untreated, but mined copper, lead, nickel and zinc ores are turned into concentrates, while bauxite is turned into alumina. Iron ore, concentrates and alumina are traded as primary commodities. Smelters process these into refined metals and useful alloys such as steel.