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an article ofcommerceespecially when delivered for shipment

a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price

one that is subject to ready exchange or exploitation within a market


But Sanders and other stalwart single-payer proponents see health care as fundamentally different from other

and believe the government should guarantee health coverage.

, Is employer-sponsored insurance really a good deal for workers?, 7 Feb. 2019

But with clean glass containers becoming a more sought after

, the town may look to take it out of its recycling stream with separate drop-off containers around town.

, South Windsor Considering Separating Glass From Its Recycling Stream, 6 July 2018

since at least the 16th century, and by the middle of the 17th century, something like an international market in art was up and running.

, Jean-Michel Basquiat Is Still an Enigma, 24 June 2018

And Twain, a one-time riverboat pilot, made nothing substantial, produced no

That record solidified the band as a marketable

, Moody Blues, Cars, Bon Jovi light up 2018 Rock & Roll Hall of Fame inductions, 14 Apr. 2018

Behavioral data around your home life can then become a kind of

depend on corn, which feeds chickens, dairy cattle, beef cattle and, yes, even humans.

, Can Wisconsins corn take the heat? Study warns rising temperatures could be devastating, 19 June 2018

Railroads are now poised to order more equipment to keep up with rising shipments of

such as grain and the sand used in hydraulic fracturing for oil and natural gas.

, GE will merge its locomotive business with Wabtecin an $11.1b deal, 21 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word commodity. Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors.Send us feedback.

15th century, in the meaning defined atsense 1

Middle Englishcommoditee, from Anglo-French, from Latincommoditat-, commoditas, fromcommodus

Acommodityis any homogenous good traded in bulk on an exchange.

Grain, precious metals, electricity, oil, beef, orange juice, and natural gas are traditional examples of commodities, but foreign currencies, emissionscredits, bandwidth, and certain financial instruments are also part of todays commodity markets. According to the New York Mercantile Exchange, Amarketwill flourish for almost any commodity as long as there is an active pool of buyers and sellers.

To be considered a commodity, an item must satisfy three conditions:

— It must be standardized (for agricultural and industrial commodities it must be in a raw state).

— It must be usable (i.e., have a shelf life) upon delivery.

— Its price must vary enough to justify creating a market for the item.

The world of commodities is complex, fascinating, and has a profound effect on economies and consumers around the world.How Commodities Are TradedBuyers and sellers can trade a commodity either in thespot market(sometimes called thecash market), whereby the buyer and seller immediately complete their transaction based on current prices, or in thefutures market.

Most buyers and sellers trade commodities on thefutures marketsbecause many commodity producers — particularly those of traditional commodities like grain — bear the risk of potentially negative price changes when their products are finally ready for the market.Futures contracts, whereby the buyer purchases theobligationto receive a specific quantity of the commodity at a specific date and at a specific price, thereforeoffersome price stability to commodity producers and commodity users.

Futures contracts are standardized, meaning that each commodity has the same specifications for the products quality, quantity, and delivery. This helps ensure that all prices mean the same thing to everyone in the market. Crude oil is an example of a traditional commodity that is frequently traded using futures contracts. Because each kind of crude oil (lightsweet crude, for example) meets the same quality specifications, buyers know exactly what theyre getting, regardless of the source of the oil. However, sometimes producers attempt to brand their products in an effort to obtain higher prices.

As in anyfuturestrading, there are those whohedgeand those who speculate on commodities. Hedgers do not usually seek aprofit; they trade primarily to protect against rising (or falling) prices to stabilize the costs (orrevenues) of their business operations. A cereal manufacturer, for example, might wish to hedge against rising costs of certain grains, which could drive upraw materialscosts, increase cost of goods sold, and crimp grossprofit margins. Speculators, on the other hand, are strictly in pursuit of profits and are essentially placing bets on the future prices of certain commodities.RegulationThe Commodity Futures Trading Commission (CFTC) regulates commodities futures trading through its enforcement of the Commodity Exchange Act of 1974 and the Commodity Futures Modernization Act of 2000. The CFTC works to ensure the competitiveness, efficiency, and integrity of the commodities futures markets and protects against manipulation, abusive trading, and fraud.

Commodities ExchangesThere are six major commodity exchanges in the U.S.: TheNew York Mercantile Exchange (NYMEX), theChicago Board of Trade (CBOT), the Chicago Mercantile Exchange, the Chicago Board of Options Exchange (CBOE), the Kansas City Board of Trade, and the Minneapolis Grain Exchange. The New York Mercantile Exchange is the worlds largest physical commodity futures exchange. When the hours foropen outcryand electronic trading are combined, some exchanges are open for nearly 22 hours a day.

Commodities exchanges do not set the prices of the traded commodities. Instead, supply and demand determine commodities prices. Exchange members, who act on behalf of their customers or for their own account, engage in open-outcry auctions in pits on the exchange floors. During an open-outcry auction, buyers and sellers announce their bids and offers. When two parties agree on a price, the trade is recorded both manually and electronically. The exchange then disseminates the price information to news services and other reporting agencies around the world.

Commodities exchangesguaranteeeach trade using clearing members who are responsible for managing the payments between buyer and seller. Clearing members — usually large banks and financial services companies — require traders to make good-faithdeposits(called margins) in order to ensure they have sufficientfundsto handle potential losses and will therefore notdefaulton their trades. The risk borne by clearing members lends furthersupportto the strict quality, quantity, and delivery specifications of commodities futures contracts.

Commodities are theraw materialsused by virtually everyone. The orange juice on your breakfast table, the gas in your car, the meat on your dinner plate, and the cotton in your shirt all probably interacted with a commodities exchange at one point. Commodities exchange participants set or at least influence the prices of many goods used by companies and individuals around the globe. Changes in commodity prices can affect entire segments of aneconomy, and these changes can in turn spur political action (in the form of subsidies, tax changes, or other policy shifts) and social action (in the form of substitution, innovation, or other supply-and-demand activity).

In general, however, theliquidityand stability of the commodities exchanges helps producers, manufacturers, other companies, and even entire economies operate more efficiently and more competitively.

See the full definition forcommodityin the English Language Learners Dictionary

Thesaurus:All synonyms and antonyms forcommodity

Nglish:Translation ofcommodityfor Spanish Speakers

Britannica English:Translation ofcommodityfor Arabic Speakers

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