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Commodities are raw materials or primary agricultural products that are bought and sold in bulk on commodities exchanges. They are typically standardized and interchangeable with other goods of the same type. Commodities can be classified into several categories, including agricultural (e.g., wheat, corn), energy (e.g., crude oil, natural gas), metals (e.g., gold, silver), and soft commodities (e.g., cotton, coffee).
Commodities are often traded through futures contracts, which are agreements to buy or sell a specific quantity of a commodity at a predetermined price on a specified future date. Commodities trading offers opportunities for portfolio diversification and speculation but also carries risks, including price volatility, geopolitical risks, and regulatory changes. It’s essential for traders and investors to understand these risks and conduct thorough research before participating in commodities markets.