Agricultural Commodity

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An agricultural commodity is a vital component of global financial markets, encompassing a wide array of natural resources that are derived from living organisms and used for various human purposes. The definition of agricultural commodities is comprehensive and includes various categories as outlined in Commodity Futures Trading Commission regulation 1.3(zz).[1][2][3]

Categories of Agricultural Commodities[edit]

Enumerated Commodities: The first category of agricultural commodities includes those specifically listed in section 1a of the Commodity Exchange Act (CEA). These enumerated commodities are fundamental to agricultural trading and include staples like wheat, cotton, corn, the soybean complex, livestock, and more. These commodities have well-established markets and serve as essential components of the global food and agricultural supply chain.

General Operational Definition: This broader category covers all other commodities derived from living organisms, including plant, animal, and aquatic life. These commodities are generally fungible within their respective classes, meaning they can be exchanged or substituted easily due to their similar characteristics. They are primarily used for human food, shelter, animal feed, or natural fiber production. Examples of commodities falling under this category include coffee, cocoa, timber, and fish.[4]

Catch-All Category: The third category encompasses agricultural commodities that are generally recognized as being agricultural in nature but may not fit precisely within the general operational definition. Examples include tobacco, products of horticulture (such as fruits and vegetables), and any other commodities consumed by animals or humans. The Commodities Futures Trading Commission (CFTC) has the authority to designate additional commodities under this category through rulemaking processes.

Commodity-Based Indexes: The final category pertains to commodity-based indexes primarily composed of underlying agricultural commodities. These indexes, widely used by investors and traders, track the performance of various agricultural commodities. Examples include commodity price indexes and agricultural commodity exchange-traded funds (ETFs).