What is commodity?

In economics, a commodity is a type of economic good, typically a resource, that possesses full or significant fungibility—meaning the market views different instances of the good as interchangeable, regardless of the producer.

The price of a commodity is generally determined by overall market conditions. Established physical commodities often have actively traded spot and derivative markets. Due to their widespread availability, commodities tend to have lower profit margins, and factors like branding hold less significance compared to price.

Most commodities consist of raw materials, essential resources, agricultural products, or mined materials, such as iron ore, sugar, and grains like rice and wheat. Additionally, mass-produced, standardized products such as chemicals and computer memory can also be classified as commodities. Common examples include crude oil, corn, and gold.