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.
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.
Main types
Primary commodities
Primary commodities are either extracted or captured directly from natural resources. They come from farms, mines or wells (e.g. crude oil).
Secondary commodities
Secondary commodities are produced from primary commodities to satisfy specific market needs (e.g. crude oil is refined to make gasoline).
Commodity categories
Agricultural
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).
Energy
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.
