Definitions (2)

1. A physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The price of the commodity is subject to supply and demand. Risk is actually the reason exchange trading of the basic agricultural products began. For example, a farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be.
2. More generally, a product which trades on a commodity exchange; this would also include foreign currencies and financial instruments and indexes.

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Our company used to focus on trading stocks and bonds but recently we have been looking into trading a specific commodity on the market.

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The corn grown by one farmer differs very little from the corn grown by another farmer, which allows them both to enter the commodity market to minimize their risk.

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