A commodity is a good In macroeconomics and accounting, a good is contrasted with a service. In this sense, a good is defined as a physical product, capable of being delivered to a purchaser and involves the transfer of ownership from seller to customer, say an apple, as opposed to an (intangible) service, say a haircut. A more general term that preserves the for which there is demand, but which is supplied without qualitative The term qualitative data is used to describe certain types of information. This is the almost the converse of quantitative data, in which items are more precisely described data in terms of quantity and in which numerical values are used. However, data originally obtained as qualitative information about individual items may give rise to differentiation A concept in Economics and Marketing proposed by Edward Chamberlin in his 1933 Theory of Monopolistic Competition across a market A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. Competition is essential in markets, and separates market from trade. It is fungible Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. Examples of highly fungible commodities are crude oil, wheat, orange juice, precious metals, and currencies, i.e. equivalent no matter who produces it. Examples are petroleum, notebook paper, milk or copper.[1] The price of copper is universal, and fluctuates daily based on global supply and demand. Stereo systems, on the other hand, have many aspects of product differentiation, such as the brand A brand is the identity of a specific product, service, or business[page needed]. A brand can take many forms, including a name, sign, symbol, color combination or slogan. The word brand began simply as a way to tell one person's cattle from another by means of a hot iron stamp. A legally protected brand name is called a trademark. The word brand, the user interface, the perceived quality etc. And, the more valuable a stereo is perceived to be, the more it will cost.
In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. Well-established physical commodities have actively traded spot The spot market or cash market is a public financial market, in which financial instruments are traded and delivered immediately. The spot market can be of both types: and derivative A derivative, in non-financial-expert terms, is an agreement or contract that is not based on a real, or true, exchange, i.e.: There is nothing tangible like money, or a product, that is being exchanged. For example, a person goes to the grocery store, exchanges a currency for a commodity (say, an apple). The exchange is complete, both parties markets. Generally, these are basic resources and agricultural Agriculture is the production of food and goods through farming. Agriculture was the key development that led to the rise of human civilization, with the husbandry of domesticated animals and plants creating food surpluses that enabled the development of more densely populated and stratified societies. The study of agriculture is known as products such as iron ore Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in color from dark grey, bright yellow, deep purple, to rusty red. The iron itself is usually found in the form of magnetite , hematite (Fe2O3), goethite (FeO(OH)), limonite (FeO(OH).n(H2O)) or siderite (FeCO3), crude oil Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights, and other organic compounds, that are found in geologic formations beneath the earth's surface, coal Coal is a readily combustible black or brownish-black sedimentary rock normally occurring in rock strata in layers or veins called coal beds. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure. Coal is composed primarily of carbon along with variable, ethanol Ethanol, also called ethyl alcohol, pure alcohol, grain alcohol, or drinking alcohol, is a volatile, flammable, colorless liquid. It is a powerful psychoactive drug and one of the oldest recreational drugs. It is best known as the type of alcohol found in alcoholic beverages and thermometers. In common usage, it is often referred to simply as, salt Salt is a mineral that is composed primarily of sodium chloride. It is essential for animal life in small quantities, but is harmful to animals and plants in excess. Salt flavor is one of the basic tastes, making salt one of the oldest, most ubiquitous food seasonings. Salting is an important method of food preservation, sugar Sugar is an informal term for a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose characterized by a sweet flavor. In food, sugar almost exclusively refers to sucrose, which primarily comes from sugar cane and sugar beet. Other sugars are used in industrial food preparation, but are usually known by more specific, coffee beans A coffee bean is the seed of the coffee plant . Even though they are seeds, they are referred to as 'beans' because of their resemblance. The fruits, coffee cherries or coffee berries, most commonly contain two stones with their flat sides together. In a crop of coffee, a small percentage of cherries contain a single bean, instead of the usual two, soybeans The soybean or soya bean (UK) (Glycine max) is a species of legume native to East Asia. The plant is classed as an oilseed rather than a pulse. It is an annual plant that has been used in China for 5,000 years to primarily add nitrogen into the soil as part of crop rotation, aluminium Aluminium (UK: /ˌæljʉˈmɪniəm/ AL-yew-MIN-ee-əm) or aluminum (US: /əˈluːmɨnəm/ ( listen) ə-LOO-mi-nəm) is a silvery white member of the boron group of chemical elements. It has the symbol Al and its atomic number is 13. It is not soluble in water under normal circumstances. Aluminium is the most abundant metal in the Earth's crust,, copper Copper is a chemical element with the symbol Cu (Latin: cuprum) and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is rather soft and malleable, and a freshly exposed surface has a pinkish or peachy color. It is used as a thermal conductor, an electrical conductor, a building material, and a, rice Rice is the seed of the monocot plant Oryza sativa. As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East, South, Southeast Asia, the Middle East, Latin America, and the West Indies. It is the grain with the second highest worldwide production, after maize, wheat Wheat is a grass, originally from the Fertile Crescent region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize (784 million tons) and rice (651 million tons). Globally, wheat is the leading source of vegetable protein in human food, having a, gold Gold is a chemical element with the symbol Au (from Latin: aurum, "shining dawn", hence adjective, aureate) and an atomic number of 79. It has been a highly sought-after precious metal for coinage, jewelry, and other arts since the beginning of recorded history. The metal occurs as nuggets or grains in rocks, in veins and in alluvial, silver Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal. The metal occurs naturally in its pure, free form (native silver), as an alloy with gold and other metals, and, palladium Palladium is a chemical element with the chemical symbol Pd and an atomic number of 46. Palladium is a rare and lustrous silvery-white metal that was discovered in 1803 by William Hyde Wollaston, who named it after the asteroid Pallas, which was named after the epithet of the Greek goddess Athena, acquired by her when she slew Pallas, and platinum Platinum is a chemical element with the chemical symbol Pt and an atomic number of 78. Its name is derived from the Spanish term platina del Pinto, which is literally translated into "little silver of the Pinto River." It is in Group 10 of the periodic table of elements. A dense, malleable, ductile, precious, gray-white transition metal,. Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.
There is another important class of energy commodities which includes electricity, gas, coal and oil. Electricity has the particular characteristic that it is either impossible or uneconomical to store, hence, electricity must be consumed as soon as it is produced.
Commoditization Commodification is the transformation of goods and services (or things that may not normally be regarded as goods or services) into a commodity occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital The term Intellectual capital collectively refers to all resources that determine the value and the competitiveness of an enterprise. As such, it includes as subsets the attributes that concur to building all financial statements as well as the balance sheet. necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market A market is any one of a variety of different systems, institutions, procedures, social relations and infrastructures whereby persons trade, and goods and services are exchanged, forming part of the economy. It is an arrangement that allows buyers and sellers to exchange things. Competition is essential in markets, and separates market from trade participants have become commodities, such as generic pharmaceuticals A generic drug is a drug which is produced and distributed without patent protection. The generic drug may still have a patent on the formulation but not on the active ingredient and silicon chips In electronics, an integrated circuit is a miniaturized electronic circuit (consisting mainly of semiconductor devices, as well as passive components) that has been manufactured in the surface of a thin substrate of semiconductor material. Integrated circuits are used in almost all electronic equipment in use today and have revolutionized the.
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Etymology
The word commodity came into use in English in the 15th century, from the French commodité, to a benefit or profit. Going further back, the French word derived from the Latin commoditatem (nominative commoditas) meaning "fitness, adaptation". The Latin root commod- meant variously "appropriate", "proper measure, time or condition" and "advantage, benefit".
Commodity trade
Main article: Futures exchange A futures exchange or derivatives exchange is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the futureIn 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.
- Chicago Board of Trade The Chicago Board of Trade , established in 1848, is the world's oldest futures and options exchange. More than 50 different options and futures contracts are traded by over 3,600 CBOT members through open outcry and eTrading. Volumes at the exchange in 2003 were a record breaking 454 million contracts. On 12 July 2007, the CBOT merged with the (CBOT)
- Chicago Mercantile Exchange The Chicago Mercantile Exchange (often called "the Chicago Merc," or "the Merc") is an American financial and commodity derivative exchange based in Chicago. The CME was founded in 1898 as the Chicago Butter and Egg Board. Originally, the exchange was a non-profit organization. The exchange demutualized in November 2000, went (CME)
- Dalian Commodity Exchange The Dalian Commodity Exchange (simplified Chinese: 大连商品交易所; traditional Chinese: 大連商品交易所; pinyin: Dàlián Shāngpin Jiāoyìsuǒ) is a Chinese futures exchange based in Dalian. It is a non-profit, self-regulating and membership legal entity established on February 28, 1993 (DCE)
- Euronext.liffe Source:"euronext.com". http://www.euronext.com/trader/indicescomposition/composition-4411-EN-FR0003502079.html?selectedMep=1&idInstrument=22218 (LIFFE The London International Financial Futures and Options Exchange is a futures exchange based in London. LIFFE is now part of NYSE Euronext following its takeover by Euronext in January 2002 and Euronext's merger with New York Stock Exchange in April 2007)
- Kansas City Board of Trade The Kansas City Board of Trade , located at 4800 Main Street in Kansas City, Missouri, is a commodity futures and options exchange regulated by the Commodity Futures Trading Commission (CFTC) that specializes in the hard red winter wheat -- the principal ingredient of bread (KCBT)
- Kuala Lumpur Futures Exchange Bursa Malaysia is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully-integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services. The wholly-owned subsidiaries of Bursa Malaysia own and operate the (KLSE)
- London Metal Exchange The London Metal Exchange or LME is the futures exchange with the world's largest market in options, and futures contracts on base and other metals. As the LME offers contracts with daily expiry dates of up to three months from trade date, along with longer-dated contracts, it also allows for cash trading. It offers hedging, worldwide reference (LME)
- New York Mercantile Exchange The New York Mercantile Exchange is the world's largest physical commodity futures exchange, located in New York City. Its two principal divisions are the New York Mercantile Exchange and Commodity Exchange, Inc (COMEX) which were once separate but are now merged. The parent company of the New York Mercantile Exchange, Inc., NYMEX Holdings, Inc (NYMEX)
- Multi Commodity Exchange Multi Commodity Exchange is an independent commodity exchange based in India. It was established in 2003 and is based in Mumbai. The turnover of the exchange for the period Apr-Dec 2008 was INR 32 Trillion . MCX offers futures trading in Agricultural Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils & Oilseeds, Energy, (MCX)
- International Indonesian Forex Change Market (IIFCM)
Markets for trading commodities Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts can be very efficient Economic efficiency is used to refer to a number of related concepts. It is the using of resources in such a way as to maximize the production of goods and services. One economic system is more efficient than another if it can provide more goods and services for society without using more resources. In absolute terms, a system can be called, particularly if the division into pools matches demand segments Market segmentation is a concept in economics and marketing. A market segment is a sub-set of a market made up of people or organizations sharing one or more characteristics that cause them to demand similar product and/or services based on qualities of those products such as price or function. A true market segment meets all of the following. These markets will quickly respond to changes in supply and demand Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity to find an equilibrium In economics, economic equilibrium is simply a state of the world where economic forces are balanced and in the absence of external influences the values of economic variables will not change. It is the point at which quantity demanded and quantity supplied are equal. Market equilibrium, for example, refers to a condition where a market price is price In all modern economies, the overwhelming majority of prices are quoted in units of some form of currency. Although in theory, prices could be quoted as quantities of other goods or services this sort of barter exchange is rarely seen and quantity. In addition, investors can gain passive exposure to the commodity markets through a commodity price index A commodity price index is a fixed Mandan weight index or average of selected commodity prices, which may be spot or futures prices. It is designed to be representative of the broad commodity asset class or a specific subset of commodities, such as energy or metals.
Inventory data
The inventory Inventory is a list for goods and materials, or those goods and materials themselves, held available in stock by a business. It is also used for a list of the contents of a household and for a list for testamentary purposes of the possessions of someone who has died. In accounting inventory is considered an asset of commodities plays a role in the pricing, with low inventories typically leading to more volatile future prices and increasing the risk of a "stock-out" (inventory exhaustion). According to economist theorists, companies receive a convenience yield by holding inventories of certain commodities. Data on inventories of commodities are not available from one common source, although data is available from various sources. Inventory data on 31 commodities was used in a 2006 study on the relationship between inventories and commodity futures risk premiums.[2]
Commodities in Marxism
For the Marxist definition of a commodity, see Commodity (Marxism).In classical political economy and especially Karl Marx's critique of political economy, a commodity is any good or service produced by human labour and offered as a product for general sale on the market. Some other priced goods are also treated as commodities, e.g. human labor-power, works of art and natural resources, even although they may not be produced specifically for the market, or be non-reproducible goods.
Marx's analysis of the commodity is intended to help solve the problem of what establishes the economic value of goods, using the labor theory of value. This problem was extensively debated by Adam Smith, David Ricardo and Karl Rodbertus-Jagetzow among others. Value and price are not equivalent terms in economics, and theorising the specific relationship of value to market price has been a challenge for both liberal and Marxist economists.
See also
| Look up commodity in Wiktionary, the free dictionary. |
- List of traded commodities
- Commodity fetishism
- Commodity (Marxism)
- Commodity markets
- Commodity money
- Commodity price index
- 2000s commodities boom
- Trade
- Jim Rogers (commodities expert)
- Trading Places - comedic film about playing the commodity markets
Notes
- ^ O'Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 152. ISBN 0-13-063085-3. http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4.
- ^ Gorton GB et al. (2008). The Fundamentals of Commodity Futures Returns. Yale ICF Working Paper No. 07-08.
External links
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=592262
Categories: Commodities used as an investment | Business terms
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Wed, 21 Jul 2010 19:43:49 GMT+00:00
Mixed; Crude Futures Sacked on Inventory Concerns nasdaq commodities were mixed as crude futures were sacked by inventory concerns and a general bearish sentiment throughout the day. Crude-oil for August delivery ... Commodities : Bernanke comments spook buyers ShareCast Commodities Buzz: US Crude Inventories Up 4000 Barrels India Infoline.com Oil Falls for a Second Day on Unexpected Supply Gain, Bernanke's Outlook Bloomberg Moneycontrol.com - BusinessWeek - CNNMoney
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Sebana Cove is a 4 Star resort All the suites come with full commodities as well as toiletries After checking out our rooms we did some last minute gear check before heading for the boat
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hu, 01 Jul 2010 00:10:26 GM
Brett Owens submits:Today, US stocks were not successful in issuing a counterpunch to yesterday's bloodbath, when there were 11 stocks down for every 1 up.
Q. Are they trying to force something out of the world, intentionally or not? Are they a political force which will eventually force nationalizing all business and trade of commodities in the US and the world? If commodities get too high, so as the common person cannot afford to pay for it, will this not force the United States and other governments to at least ban commodity trading on the exchanges?
Asked by skahhh - Mon Jun 16 09:19:37 2008 - - 2 Answers - 0 Comments
A. 1) you do not even know what you are talking about. 2) if the government bans commodity trading in the US, it will just go overseas. When people are selling their oil and someone in China offers $150, and the US says the limit is $100, who do you think will get the oil? Sorry buddy, the US government doesn't have control over the world. If gas gets too high, take a bike to work. If gold gets too high, don't buy jewelry, if corn gets too high, grow your own.
Answered by NYC_Since_the_90s - Thu Jun 19 15:42:34 2008
