agricultural commodities. what is a commodity? the generic term for any marketable item produced to...
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![Page 1: Agricultural Commodities. What is a commodity? The generic term for any marketable item produced to satisfy wants or needs. An agricultural commodity](https://reader035.vdocuments.mx/reader035/viewer/2022062307/551680c2550346a25b8b48b1/html5/thumbnails/1.jpg)
Agricultural Commodities
![Page 2: Agricultural Commodities. What is a commodity? The generic term for any marketable item produced to satisfy wants or needs. An agricultural commodity](https://reader035.vdocuments.mx/reader035/viewer/2022062307/551680c2550346a25b8b48b1/html5/thumbnails/2.jpg)
What is a commodity?
• The generic term for any marketable item produced to satisfy wants or needs.
• An agricultural commodity is a raw material or primary agricultural product that can be bought and sold– copper or coffee
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Fungibility
• Fungibility refers to the ability of a product whose individual units are capable of mutual substitution
• For instance, gold in New York is the same as gold in China, as long as it is of the same purity.
• Fungibility lets us trade huge quantities at one price.
• Prices move in direct response to supply and demand.
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Types of Commodities
• Soft Commodities are those grown– Hogs, corn, wheat
• Very volatile market, not easy to predict• Hard commodities are mined or extracted– Crude oil, gold, copper
• Easier to handle since materials do not rot and they are more integrated into the industrial process
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Commodity Futures
• An agreement to buy or sell a set amount of a commodity at a predetermined price and date