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[[File:A1 Houston Office Oil Traders on Monday.jpg|thumb|right|[[Price_of_oil#Speculative_trading_and_crude_oil_futures|Oil traders]], Houston, 2009]]
A '''commodity market''' is a [[Market (economics)|market]] that trades in the [[Primary sector of the economy|primary economic sector]] rather than manufactured products, such as [[Cocoa bean|cocoa]], fruit and [[sugar]]. Hard [[commodities]] are mined, such as [[gold]] and [[Crude oil|oil]].<ref>{{cite web|url=http://www.investopedia.com/terms/s/softcommodity.asp#axzz2EGf9ZeC2 |title=Soft Commodity Definition |publisher=Investopedia |date=15 February 2009 |access-date=6 December 2012}}</ref> [[Futures contract]]s are the oldest way of investing in commodities.{{Citation needed|date=December 2020|reason=dubious, should clarify the affirmation}} Commodity markets can include physical trading and derivatives trading using [[spot price]]s, [[Forward contract|forwards]], [[futures contract|futures]], and [[option (finance)|options]] on futures.{{clarify|date=December 2020 |reason= "can include" Physical VS Paper}} Farmers have used a simple form of derivative trading in the
{{cite web
|publisher=National Futures Association
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==Commodity price index==
In 1934, the U.S. [[Bureau of Labor Statistics]] began the computation of a daily [[Commodity price index]] that became available to the public in 1940. By 1952, the Bureau of Labor Statistics issued a
|encyclopedia=Encyclopedia of Commodity and Financial Prices: Grains and Oilseeds
|publisher=Commodity Research Bureau (CRB)
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Generally, commodity ETFs are index funds tracking non-security [[index (economics)|indices]]. Because they do not invest in securities, commodity ETFs are not regulated as investment companies under the [[Investment Company Act of 1940]] in the United States, although their public offering is subject to SEC review and they need an SEC [[no-action letter]] under the [[Securities Exchange Act of 1934]]. They may, however, be subject to regulation by the [[Commodity Futures Trading Commission]].<ref>Michael Sackheim, Michael Schmidtberger & James Munsell, DB Commodity Index Tracking Fund: An Innovative Exchange-Traded Fund, ''Futures Industry'' (May/June 2006).</ref><ref>{{cite web |last=Koyfman |first=Yevgeniy |url=http://www.indexuniverse.com/sections/newsinfocus/6362-nogaz.html |title=No Gas: Barclays Halts Issuance of Natural Gas ETN |publisher=Index universe.com |date=21 August 2009 |access-date=3 October 2011 |archive-date=26 August 2009 |archive-url=https://web.archive.org/web/20090826171306/http://www.indexuniverse.com/sections/newsinfocus/6362-nogaz.html |url-status=dead }}</ref>
The earliest commodity ETFs, such as
Commodity ETFs trade provide exposure to an increasing range of commodities and commodity indices, including energy, metals, [[Soft commodity|softs]] and agriculture. Many commodity funds, such as oil roll so-called front-month futures contracts from month to month. This provides exposure to the commodity, but subjects the investor to risks involved in different prices along the ''term structure'', such as a high cost to roll.<ref name=GoldMutualVSETF /><ref name=commodityETF />
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==Commodities exchange==
{{main|Commodities exchange}}
A commodities exchange is an
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{{Columns-list|colwidth=22em|
* [[Abuja Securities and Commodities Exchange]]
*
*
* [[Brazilian Mercantile and Futures Exchange]]
* [[Chicago Board of Trade]]
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* [[Ethiopia Commodity Exchange]]
* [[Hong Kong Mercantile Exchange]]
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* [[Intercontinental Exchange]]
* [[Iranian Oil Bourse]]
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* [[Multi Commodity Exchange]]
* [[National Commodity and Derivatives Exchange]]
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* [[National Spot Exchange]]
* [[New York Mercantile Exchange]]
*
* [[Rosario Board of Trade]]
* [[Sioux City Grain Exchange]]
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====Crude oil and natural gas====
{{See also|Chronology of world oil market events
For many years, [[West Texas Intermediate]] (WTI) crude oil, a [[Light crude oil|light, sweet crude oil]], was the world's most-traded commodity. WTI is a grade used as a [[benchmark (crude oil)|benchmark in oil pricing]]. It is the [[underlying]] [[commodity]] of Chicago Mercantile Exchange's oil futures contracts. WTI is often referenced in news reports on oil prices, alongside [[Brent Crude]]. WTI is lighter and sweeter than Brent and considerably lighter and sweeter than Dubai or Oman.<ref>[[Marius Vassiliou]] (2009). Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press. {{ISBN|0-8108-5993-9}}.</ref>
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===Other commodity markets===
Rubber trades on the [[Singapore Commodity Exchange]] in units of 1 kg priced in U.S. cents. [[Palm oil]] is traded on the [[Malaysian Ringgit]] (RM), [[Bursa Malaysia]] in units of 1 kg priced in U.S. cents. Wool is traded on the [[AUD]] in units of 1 kg. Polypropylene and Linear Low Density Polyethylene (LL) did trade on the London Metal Exchange in units of 1,000 kg priced in USD but was dropped in 2011.
==Impact on inflation==
[[Fossil fuel#Inflation effects|Fossil fuels]] and other commodities have been major drivers of inflationary periods, including the [[2021-2022 inflation spike]] exacerbated by the [[Economic impact of the Russian invasion of Ukraine|Russian Invasion of Ukraine]].<ref name=":02">{{Cite web |last=Leber |first=Rebecca |date=2022-08-12 |title=Fight climate change. End fossilflation. Here's how. |url=https://www.vox.com/science-and-health/2022/8/12/23290488/fight-climate-change-end-fossil-fuel-inflation |access-date=2024-08-18 |website=Vox |language=en-US}}</ref><ref name=":1">{{Cite web |last=Horowitz |first=Julia |date=2022-12-13 |title=Analysis: Inflation is finally falling. But the days when prices rose just 2% may never return {{!}} CNN Business |url=https://www.cnn.com/2022/12/13/economy/inflation-2-demographics-climate-deglobalization/index.html |access-date=2024-08-18 |website=CNN |language=en}}</ref> [[Gernot Wagner]] argues that commodites are undesirable energy sources because of inflationary periods that come with commodity prices.<ref name=":023">{{Cite web |last=Leber |first=Rebecca |date=2022-08-12 |title=Fight climate change. End fossilflation. Here's how. |url=https://www.vox.com/science-and-health/2022/8/12/23290488/fight-climate-change-end-fossil-fuel-inflation |access-date=2024-08-18 |website=Vox |language=en-US}}</ref><ref name=":14">{{Cite web |last=Wagner |first=Gernot |date=February 23, 2024 |title=The Ukraine War Blew Up the World's Energy Economy |url=https://heatmap.news/economy/ukraine-war-global-energy |access-date=2024-08-18 |website=heatmap.news |language=en |quote=Throughout the most recent U.S. spike in inflation in 2022, the energy category alone was responsible for around half of total inflation. And that’s just counting the direct effects. Indirectly, a good portion of the food price increases ever since are also due to higher energy costs. If the farmer pays more to harvest the crop, soon those commodity prices increase as well. Of course, it isn’t all fossil fuels...The IRA has not and will not cut inflation overnight. But that fight is indeed a big part of the bill’s legacy: Play the long game of tackling all three types of climate-related inflation — fossilflation, climateflation, and greenflation — at their very core, and indeed justify the law’s name.}}</ref>
==Regulatory bodies and policies==
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==See also==
* [[Commodity risk]]
* [[Irrevocable fee protection agreement]]
* [[List of commodity booms]]
* [[Microexchanges]]
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