Futures contracts—which are agreements to buy or sell a standardized asset at a specific future time—are the primary way commodities are bought and sold.

Futures contracts are agreements to buy or sell a standardized asset at a specific future time

When it comes to commodity trading, these legally binding agreements tend to operate on a monthly basis. Futures contracts are typically traded on futures exchanges, like those operated by CME Group and the Intercontinental Exchange.

Commodity traders are most commonly 'hedgers' or 'speculators'

While hedgers often produce and consume physical commodities (like corn, copper, or natural gas) and use the markets to manage the price risk for those commodities, speculators provide liquidity by betting on commodity price changes.

Retail investors can get exposure to commodities via various financial vehicles

While retail investors likely won't go out and purchase a bushel of commodity wheat to trade, they can get exposure to the commodities market via commodity ETFs sold on traditional stock exchanges like the NYSE and Nasdaq and other financial vehicles. There are benefits to adding commodities to a retail investor portfolio (such as a hedge against inflation and a typically low correlation with more traditional asset prices), experts caution that commodities are usually volatile investments.

Commodity trading is regulated by the CFTC to mitigate fraud and risk

Established in 1974, the CFTC regulates these markets (including swaps, futures, and certain types of options) to protect market participants from fraud, ensure fair trading conditions, and generally reduce financial risk.

The 'commodities' investment category includes livestock, oil, wheat, and more

Commodities traders look at all of these things as assets, placing short-, medium-, and long-term wagers on how much each is really worth. Commodities are valuable in part due to how essential they are in creating most of the world's marketable goods.

How exchanges like the Chicago Mercantile act as trading referees

Chicago's Mercantile Exchange emphasizes futures contracts on commodities. This podcast episode breaks down how exchanges actually work, make money, and streamline the market.

Over-the-counter markets are used to bypass traditional exchanges while trading

Commodities are regularly traded via OTC markets so that buyers and sellers can bypass central exchanges and negotiate terms more directly. Before the advent of formal exchanges, most assets were traded OTC.

It's tough to measure just how much the global commodities market is worth

That's partly because of all the different ways and places commodities are traded—such as futures exchanges, spot markets, and over-the-counter deals. Additionally, the same commodity can be traded multiple times in different markets, making it easy to risk duplicating trade values in calculations.

Spot markets are where commodities intended for relatively immediate delivery are traded

Spot markets are where physical securities are exchanged for cash. Also known as cash markets or physical markets, the trades are relatively immediate—both parties agree to an immediate transfer. Currencies and securities can also be traded on spot markets.

Prediction markets convinced regulators they're not gambling, but exchanging commodity futures contracts

Kalshi built a legal case that argues its yes/no bets on real-world events are futures contracts, and the relevant regulator—the Commodity Futures Trading Commission—agreed in 2020. Many states are now suing major prediction markets, arguing this legal case is faulty and obscures the true substance of the business: gambling.

Commodities have to meet specific specifications to be classified as commodities

In the financial sense of the term, commodities must be uniform, interchangeable, and deliverable to meet the classification. That's partly why a crop grown in your backyard might not qualify as a commodity crop.

Commodity traders are the most powerful people you've never heard of

Just beneath the surface of the global economy is a hidden layer of dealmakers for whom war, chaos, and sanctions can be a great business opportunity—they're called commodity traders. Their power partly stems from the fact that commodities are essentially the building blocks of the economy at large.

See how much key commodities are trading for in real time

This tracker shows the current price of common commodities such as crude oil, lumber, nickel, and many more, as well as how much these prices have fluctuated over the past day, year, week, and month.

The prices on prediction markets reflect how the collective forecasts future outcomes

On prediction markets, bettors bid up or down the price of contracts based on what they expect an event's outcome to be. Bettors bid up prices when they think an event is more likely to occur than the current contract price shows, so they buy the contracts, pushing the price higher. They bid down prices by selling these contracts when they believe an event is less likely to occur, driving the price down due to supply and demand.

Stock options give investors the right to buy or sell a stock at an agreed-upon price and date

There are two types of options: calls, which are bets that a stock will rise (or not rise past a certain point), and puts, bets that a stock will fall (or not fall past a specific level). While stock options give investors the right to do these trades, they do not obligate buyers to follow through with them—sellers, on the other hand, must perform the option if it is exercised

How key commodities have performed since 2019, visualized

Due in part to factors such as the COVID-19 pandemic and global supply chain issues, commodities experienced significant volatility from 2019 to 2025. For instance, coffee bean prices saw major swings in recent years due to climate challenges in countries including Brazil and Vietnam.

Call options 101

A call option is a contract that gives the option buyer the right to buy an underlying asset at a specified price within a specific time period. A call buyer profits when the underlying asset increases in price. Learn more about the financial contract and how you can use it in this article.

Contract prices on prediction markets are generally interpreted as implied probabilities

For example, if a contract trading is at $0.65, that could be read as the market assigning a 65% probability to that event occurring. The most common format for prediction markets is winner-take-all: The contract settles at $1 if the event occurs, or $0 if it doesn't.

'The Great Onion Corner:' Hear how short-selling onions ended with a ban on onion futures

In the early 1950s, onion farmer and produce trader Vince Kosuga cornered the onion market, resulting in a 1958 ban on onion futures from Congress. After stockpiling onions and buying onion futures, Kosuga then began shorting them. Then, he released his accumulated surplus of onions, driving the price down to essentially zero, and cashed in his short positions.

There's a grading room on the eighth floor of the New York Stock Exchange where experts loudly slurp coffee and then spit it out to test its quality

Since many agricultural commodities are traded through futures, testers ensure that the physical product that reaches the market accurately reflects the price. Coffee graders at the NYSE have to pass a four-day-long exam that's only offered every five years and has a less than 10% pass rate.

What are smart contracts?

Smart contracts are potentially one of the most useful tools associated with blockchain, and they can enable the transfer of everything from Bitcoin and fiat currency to goods transported around the world. Here’s what they do and why they’re likely to gain traction.

What are repurchasing agreements?

Repurchasing agreements are short-term trade agreements in which a dealer sells securities and agrees to repurchase them at a higher price soon after (often within 1 to 2 days). This gives dealers quick access to cash and allows the purchasing party, often the Federal Reserve, to control liquidity in securities. This can be used to alter the money supply, which is a key element in combating deflation.

Shorting is a high-risk and expensive investment strategy that hedge funds specialize in

Most investors buy stocks with the expectation that those stocks will be worth more tomorrow than they are today. Short selling, known as “shorting,” a stock is the opposite: The investor is betting the stock will drop in value.

The global economy runs on US dollars

Nearly 90% of international trade in 2019 was processed in US dollars. It's not only the most circulated currency in the world but also considered one of the most stable.

The bond market is where bonds and other debt securities are traded

Bonds are fixed-income investments allowing individuals to lend a specific amount of money to a large entity, like a government or corporation, for a set amount of time in return for interest paid out over the life of the loan. The bond market is widely considered a key economic barometer.

The stock market, explained in 3 minutes

The stock market consists of a set of exchanges and other venues where shares of public companies are bought and sold. The Nasdaq and the New York Stock Exchange are two of the most well-known exchanges in the US, while major exchanges also operate around the world, including in Tokyo, Shanghai, London, and São Paulo.

Use a prediction market profit or loss calculator

In order to calculate how much someone would make from a specific trade on a prediction market, this calculator asks for the purchase price of a given "yes" or "no" prediction, the number of contracts the trader plans to purchase, and more.

Prediction markets and sports betting are not forms of investing, despite how some fans portray them.

Investors need a 'margin account' to short sell stock

Margin accounts are leveraged accounts through brokerage firms that allow investors to make trades without the full amount of capital on hand. Similar to a secured loan, margin accounts often require some form of collateral and typically have a cap on how much investors can borrow. However, trading with a margin account is much riskier than a traditional investment account. Fees and charged interest are due on margin accounts, regardless of trade performance, meaning it's possible for investors to lose more money than just their initial investment.

Smart contracts are the foundational technology behind NFTs

Smart contracts use “if that, then this” logic to track the ownership of NFTs and record when they are bought and sold on the blockchain.

There are three main ways to start investing in the bond market

Invest in the boind market through a brokerage, mutual fund or ETF, or the US government. Each has different steps and terms to follow, from starting rates to opening specific accounts. Some bonds are relatively easy to purchase, but the process differs depending on the type of bond you want.

BlackRock says investor demand and improvements in underlying fund technology have supercharged ETF availability in 2025

Investors are likely most familiar with ETFs that invest in an index or other grouping of stocks. However, BlackRock breaks down a wide variety of options, including commodity ETFs, currency ETFs, and bond ETFs.

Bullion is either gold or silver that has at least 99.5% or 99.9% purity, respectively

It’s typically kept in the form of bars or ingots. Governments and central banks often keep bullion reserves on hand; they can use it as a hedge against inflation. One can invest in bullion via ETFs, among other financial vehicles.

Many hedge funds use short selling as an alternative investment strategy to offset risk

Hedge funds typically use a "long-short" investment strategy—where funds diversify by investing in a mix of long positions and short positions—to balance risk and maximize profits. Including short positions gives hedge funds some protection against downturns in the market, although the strategy can have uncapped losses for investors.

The different types of stablecoins include algorithmic stablecoins

In addition to fiat-backed stablecoins, commodity-backed stablecoins, and cryptocurrency-backed stablecoins, algorithmic stablecoins use smart contract-based mechanisms to maintain a stable value by responding to supply and demand.

Crypto exchanges are online platforms to buy, sell, and exchange cryptocurrencies

Crypto exchanges have grown alongside and fueled the boom in digital currencies. Popular exchanges like Coinbase, Kraken, and Binance each have separate features, fee structures, and more. You can learn how to begin with the platforms, how to carry out research, and when to be aware of the associated risks.

Pioneered by JPMorgan, credit default swaps are a form of financial derivatives that act as insurance policies for banks issuing assets created with risky loans.

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OPEC often intervenes to influence the price of oil

This guide explains how investing in oil works with in-depth explanations of each of the forces that control oil’s price. Oil is unique as a commodity in part because of OPEC’s role in regulating its price.