Glossary - Commodities
Commodities refer to raw materials or primary agricultural products that can be bought and sold, either for direct use or as inputs in the production of other goods. These include metals, energy, and agricultural products. Commodities trading can occur on both physical exchanges and virtual platforms, and prices are influenced by global supply and demand dynamics.
Also known as
- Raw materials
- Primary products
Use cases examples
- Futures Contract: A legal agreement to buy or sell a particular commodity at a predetermined price at a specified time in the future.
- Commodity Exchange Act: Legislation in the United States that regulates commodity futures trading, ensuring competitive and efficient markets.
Considerations for investors
- Assessing the impact of global economic conditions on commodity prices and how this affects the valuation of commodity-dependent businesses.
- Evaluating the expertise and strategies of companies in managing commodity price risks.
Considerations for founders
- Understanding the impact of commodity price fluctuations on the cost of raw materials vital to their business.
- Consideration of using futures contracts to hedge against price volatility in key commodities.
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