Commodities

Agricultural Commodities

| | Updated on: Oct 08, 2014

Commodities that come from the raising of crops and/or animals are called agri commodities. While some agricultural commodities, such as corn or beef, are direct products of the Earth, others such as high fructose corn syrup are derived from them.

The US Commodity Futures Trading Commission defines agri commodties as one among the four categories: (1) the enumerated commodities listed in section 1A of the Commodity Exchange Act, including wheat, cotton, corn, the soyabean complex, livestock, etc.; (2) a general operational definition that covers: “All other commodities that are, or once were, or are derived from, living organisms, including plant, animal and aquatic life, which are generally fungible, within their respective classes, and are used primarily for human food, shelter, animal feed, or natural fibre;” (3) a catch-all category for commodities that will generally be recognised as agricultural in nature, but which don’t fit within the general operational definition: “Tobacco, products of horticulture, and such other commodities used or consumed by animals or humans as the Commission may by rule, regulation, or order designate after notice and opportunity for hearing;” and (4) “Commodity-based indexes based wholly or principally on underlying agricultural commodities.”

Accordingly, ‘Agricultural commodity’ means wheat, cotton, flax, corn, dry beans, oats, barley, rye, tobacco, rice, peanuts, soybeans, sugar beets, sugar cane, tomatoes, grain sorghum, sunflowers, raisins, oranges, sweet corn, dry peas, freezing and canning peas, forage, apples, grapes, potatoes, timber and forests, nursery crops, citrus, and other fruits and vegetables, nuts, tame hay, native grass, aquacultural species (including, but not limited to, any species of finfish, mollusk, crustacean, or other aquatic invertebrate, amphibian, reptile, or aquatic plant propagated or reared in a controlled or selected environment), or any other agricultural commodity, excluding stored grain.

Commodities are split into two types: hard and soft commodities. Hard commodities are typically natural resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat, coffee, sugar, soyabeans, pork, etc.) that are raised.

The trade of agricultural commodities gave rise to the first exchanges in the Middle Ages. Even now, agricultural products are among the most important commodities and futures contracts that are traded.

Published on October 08, 2014

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