Glossary
Commodity: definition
A commodity is a raw material such as oil, copper, wheat or gold, defined well enough that one unit can stand in for another. Investors usually buy a financial contract linked to it rather than the good itself.
In practice
Standardisation is what allows a market. Grade, delivery point and contract month define a futures price. A retail product that says only the commodity’s name has skipped those definitions. Funds that roll futures can return something very different from the spot price. Shares of producers add business risk. See the commodities market page before treating any of these as inflation insurance.
A worked example
An oil fund can lose money across a year in which the headline spot price rose, because the fund sold cheaper contracts and bought more expensive later ones.
Related
Sources and review
Last reviewed: 2026-10-13. Next review due 2027-04-13. Status: editorial review of this page, not a live verification of every third-party fee.
Author: WiT Markets Editorial, Editorial desk. The WiT Markets editorial desk writes explanatory pages, comparison context and research notes. It separates sourced facts from items that are not confirmed, and it does not provide personal recommendations.
Reviewed by: WiT Markets Research Review.
Primary and regulatory sources
- CME Group — checked 2026-10-13