Commodity (commodities)

Basic raw materials and foodstuffs such as metals, petroleum, plantation crops, "softs" (such as coffee and sugar) and grains and oilseeds. Commodities are traded on a commodity exchange both by the companies that use them (e.g. chocolate manufacturers) and by speculators. Futures contracts allow commodity producers and commodity users to bring some predictability and stability to pricing. By buying futures contracts, they can hedge against underlying price changes in the commodity. The largest commodity exchanges are in the US and UK. In the US, the main exchanges are the New York Mercantile Exchange, Chicago Board of Trade, Chicago Mercantile Exchange, Kansas City Board of Trade and Mid America Commodity Exchange. In the UK, commodities are traded on the London Metal Exchange, the International Petroleum Exchange and Euronext Liffe which incorporates the former London Commodity Exchange.