What are Commodities?

Commodities are bulk products, such as Coffee, Beef, Gold, Oil, Copper and Wheat, to mention just a few. These are the raw materials that are economically profitable enough to be traded on special commodity markets. They are split into ‘hard’ commodities such as Gold, Copper, Zinc etc, and ‘soft’ commodities such as Cocoa, Coffee, and Sugar etc.

There is strong demand for commodities from the emerging economies, particularly those referred to as the BRIC countries, that is, Brazil, Russia, India and China. This strong demand, combined with a finite and inelastic supply has created a bull market.

Emerging economies generate a disproportionate demand for natural resources. They need hard commodities such as steel, nickel, tin and copper, for their industries and soft commodities, such as cocoa, coffee, soybeans, potatoes, wheat and barley, to feed an increasingly urban population.