Who knew that stuff like corn, coffee, oil or gold could be packaged up and traded? That’s what a commodity is really.
Commodities are raw materials that are packaged up into standardised bulk amounts and traded on specialised exchanges.
These materials can include agricultural products like wheat, corn and coffee; or industrial products such as iron ore, copper or oil.
Because they are bulky, physical products which can be difficult to access directly, professional fund managers will trade specialised contracts that represent the commodities.