Commodities: Categories and Forms

Physical commodities are commonly referenced in three broad categories: 

  • energy (e.g. oil and petroleum and gas)
  • metals and minerals (e.g. iron ore, copper, aluminum, gold)
  • agricultural and other “soft”commodity products (e.g. coffee, cocoa, wheat, soybeans, cattle).*

Broadly speaking, physical commodities come in two forms:

  • Primary commodities are either extracted or captured directly from natural resources. They come from farms, mines and wells. As natural products that come out of the ground, the quality and characteristics of primary commodities vary widely.
  • Secondary commodities are produced from primary commodities to satisfy specific market needs. Crude oil is refined to make gasoline and to produce metals. There may be minor variations in quality depending on how a secondary commodity is produced.

Definition of Commodity Trading

For the purpose of this guidance, commodity trading is broadly understood as the process of sourcing (procuring), buying, transporting, storing, transforming and selling physical commodities, including the management of associated risks, as well as operating physical assets in this context (see General Descriptions of Activities Performed by Commodity Trading Companies below).

Commodity trading firms and companies are understood to refer to any business enterprises performing a commodity trading activity.

Firms engaging in commodity trading vary greatly in scope, scale, size and organisational form, ranging from micro-enterprises to large diversified multinationals. Some are very specialised, trading one or a few commodities purchased from or sold to multiple actors, others trade a broad set of commodities within or across commodities categories.

Commodity trading firms display different organisational forms, with most companies being privately owned, while others are listed companies (see Mapping Study p10).

They also differ in their involvement in the supply chain.

General Descriptions of Activities Performed by Commodity Trading Companies
General Descriptions of Activities Performed by Commodity Trading Companies