Economic value of English law | Oxera

A1.2: Commodity trading

Published: October 5th 2021
Chapter A1

A1.2: Commodity trading

Commodities are undifferentiated goods that are often used as inputs in the production of other goods and services. Examples of commodities include agricultural products, metals, and crude and refined oil.

The sale and purchase of commodities is regularly carried out on commodities exchanges—a market in which multiple buyers and sellers trade commodities using commodity-linked financial products that are governed by standard form contracts.[1]United Nations (2009), ‘Overview of the world’s commodity exchanges – 2007’. This allows producers and consumers of commodities from all around the world to trade in centralised marketplaces with standardised terms using standard form contracts offered by exchanges and trade associations.[2]Ibid.

The trading of commodities therefore involves internationally mobile transactions as commodities can be traded on exchanges worldwide.