Futures contracts 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.

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.

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.

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.

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.

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.

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.

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

'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.

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.

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.

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.

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.

SAFE is a financial tool that stands for ‘simple agreement for future equity’

In the first part of a two-part series, SAFEs are explained as a way angel investors safeguard their investment in a startup. These agreements outline equity expectations.

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.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

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.

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.

Buyers used to borrow money from people within their communities to purchase property

Historically, borrowing money from other people to purchase property was common until private financing companies—primarily building and loan associations—stepped in to offer mortgages to buyers.

Life insurance policies and annuities are both contracts between individuals and insurance companies

But while life insurance policies are paid out only after an individual dies, annuities are intended to provide a steady income while the investor is still alive. Also, life insurance protects an investor's family in the event of their death, but an annuity helps protect an investor from outliving their retirement savings.

What are tariffs and how do they work?

Tariffs are taxes on imported goods paid by importing companies but typically passed on to consumers. They vary by country and product and, despite recent spikes, have historically accounted for less than 2% of federal revenue. Explore more with these data visualizations from USAFacts.

Trademarks are a form of consumer protection

Trademarks help brands distinguish their products from competitors, but they also give consumers clarity around the product they are buying and where it comes from. Distinguishable names help prevent consumer confusion and maintain a consumer's ability to choose their preferred product and brand.

Who accepts bitcoin payments in 2025?

Bitcoin and other cryptocurrencies are used primarily as stores of value or speculative assets, and less likely to be used to purchase goods and services. Advocates for the currency say as an increasing number of retailers accept bitcoin, average holders will begin to treat the currency more like traditional money.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

Why are drug dealers putting fentanyl in everything?

A few grains of fentanyl, a synthetic opioid far more potent than heroin or morphine, are enough to kill a typical adult human. It's made its way into other, less lethal street drugs, where it may be used to increase the highs experienced by unknowing users, increasing their likelihood of addiction and overdose.

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