CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.

Commodity definition

Commodity has a particular significance in relation to IG's platform. Here, we define commodity in general investing and explain what it means to you when trading with IG.

A commodity is a basic physical asset, often used as a raw material in the production of goods or services.

To be traded on the markets, a commodity must be interchangeable with another commodity of the same type and grade. That means that to a trader, gold is gold: no matter where it was mined, or which company mined it. The term for this quality in commodities is fungible.

Types of commodity

Some of the most commonly traded commodities include:

They are split into two varieties. Hard commodities are metals or energy resources, mined or extracted from natural resources. Soft commodities are agricultural, farmed or grown. Soft commodities tend to be seasonal, and prone to spoilage.

The buying and selling of commodities for profit is known as commodities trading. Commodities trading is split into two types, the spot market and the futures market. The spot market is used for commodities that will be delivered immediately, and the futures market is for commodities that will be delivered at some point in the future.

Most commodities traders are speculators and do not wish to take delivery of the commodities they are trading, so most futures contracts are closed before their delivery date. Futures contracts are traded on futures exchanges, with most commodities being associated with a specific local exchange. 

Visit our commodities section

Find out more about commodities trading with IG.

A - B - C - D - E - F - H - I - L - M - N - O - P - R - S - T - U - V - W

See all glossary trading terms

Help and support

Get answers about your account or our services.

Get answers

Or contact us on +971 (0) 4 559 2100 or helpdesk.ae@ig.com.

Our office is open 5 days a week, Sunday to Thursday from 8am to 7pm (Dubai time). Support line is available 24hrs a day, 7 days a week, except for Saturday from 1am to 11am (Dubai time).

CFDs are a leveraged product and can result in losses that exceed deposits. Trading CFDs may not be suitable for everyone, so please ensure you fully understand the risks and take care to manage your exposure.