Understanding Commodities: Properties, Types and Types

Understanding Commodities Properties, Types and Types

Nikereact.org – Commodities are familiar in the economic world. Those who work in the world of economics may already be familiar with the term this commodity.

However, many still do not know what a commodity is. Therefore, this article will discuss commodities.

Starting from understanding commodities in general, understanding commodities in language, understanding commodities in economics, types of commodities, types, to trading systems.

Understanding Commodities

Understanding Commodities Properties, Types and Types

Commodity is an item or product that can be traded. Trading itself is a job related to selling and buying an item. Of course the goal is to make a profit.

Same thing, the purpose of this commodity is also to get a profit. Commodity trading can also be done by way of exchange. In that case, it means that an item will be exchanged for another item or product.

However, it has a record. The value of the two goods to be exchanged must be equal. Only then can the two goods or products be exchanged for each other.

According to another opinion, the meaning of a commodity is a real object. These objects tend to be easy to trade. In addition, it can also be submitted in physical form.

According to another opinion, the meaning of a commodity is a real object. These objects tend to be easy to trade. In addition, it can also be submitted in physical form.

Commodities can also be stored for a certain period of time. Also, it can be exchanged for other goods of the same type, which are traded by investors on futures exchanges.

According to the KBBI or the Big Indonesian Dictionary, commodities have the meaning of the main merchandise product. It can also be said as a commercial object. Generally, raw products can be classified based on several things, namely quality and according to international trade standards. Examples such as coffee, wheat, corn, rubber, rice and other things.

Based on the explanations above, it can be concluded that the notion of a commodity is a major trading product. In addition, it can also be said that the notion of a commodity is another commercial object that can be traded, as an import or export item.

The purpose of buying and selling commodities is none other than to make a profit. In a more general context, indices, foreign exchange and instruments can also be classified as commodities. Because, including as an easy product when you want to trade. So, the notion of commodities does not only refer to the daily needs of the community.

Understanding Commodities in Language

Speaking of the word commodity, in this linguistics the word commodity began to be known and used in England. Precisely in the 15th century. Actually the word commodity comes from the French, from the word commodite.

The meaning of the word commodite is something that is pleasing in service and quality. In the Latin root, it is called commodity. Refers to various ways of precise measurement.

From a state of time. Both the right conditions, good quality, the ability to produce something or property, and the added value of profits.

In Germany, goods or products offered for sale are called die ware. While in France it is called produit de base. Examples such as industrial raw materials, energy or other goods.

In Indonesia itself, it can be said as merchandise, raw materials or commercial goods. These things can be classified based on their quality. Something with international trade standards. Such as coffee, rubber, wheat and so on.

Understanding Commodities in Economics

In economics, commodities will be used specifically. The use is to refer to a group of economic goods or services. The goods or services must have full exemplary, or some of them are substantial.

In treating this commodity, the market does not pay attention to the producer or the brand that produces it. As an example, for example wheat. Starting from the basics, the market will not bother to question who has produced the commodity.

Is a slave from Russia? Is a farmer from India? Or a capitalist from England? The market will treat the commodity commensurately.

This book is a practical-technical book written as a guide/handle for practitioners engaged in the cultivation of non-fish marine biota, such as fish farmers, technicians, extension workers, assistants, facilitators/trainers, and entrepreneurs/prospective entrepreneurs as part of the effort to encourage culture. marine resources or mariculture, especially non-fish marine biota.

Commodity Properties

Based on the understanding of commodities above, there are two characteristics possessed by commodities. These two properties include:

  • An item will be produced and sold by many producers. Manufacturers are different.
    An item will be uniform in quality in each marketing chain.
  • Based on the two characteristics of the commodity, the consumer or the market cannot differentiate the goods that will be produced by the producer. They can differentiate from one manufacturer to another.

However, not all tangible goods are commodities. Examples such as clothing convection. Although mass-produced, without being based on orders by many manufacturers, a clothing convection is not considered a commodity.

Clothing is an object that has a form, which is used by everyone. However, clothing is not a basic material. Clothing is a finished product.

Economists say that clothing is a product differentiation from fabric. Commodities will experience an expansion of definition along with the development of technology and science.

Currently, commodities are not only dominated by goods from agriculture or mining. However, commodities have also penetrated financial products. Examples such as indices and foreign exchange. In addition, information technology products, for example, such as mobile phone bandwidth.

Commodity Product Type

1. Metal

The first type of commodity product is metal. Commodities of this type of metal consist of goods or products produced from mining activities, and are metal. Commodities of this type can also be divided into two more types.

The two types are precious metals and industrial metals. For precious metals, examples are gold, platinum, silver and palladium. In general, this commodity is calculated using troy ounces. However, specifically for gold products, trading activities can also be carried out using units in the form of kilograms.

On the other hand, industrial metals are products referred to as nickel, cobalt, copper, aluminum, tin, magnesium, titanium and so on. Usually, added products of this type will be traded using metric units. It can be ounces, kilograms, even tons.

2. Energy

The type of energy commodity is similar to metal. Energy commodities can also be in the form of all products produced from mining excavations. And in the form of exploration.

However, the product can be used by humans as a fuel. Generally, the products of this energy commodity will be traded on an international scale. Use metric units, tons or barrels.

Some examples of the types of energy commodities in natural gas, coal, diesel, unleaded gasoline and petroleum (Brent Crude Oil and Light Sweet Crude Oil).

3. Agriculture

The third type of commodity product is agriculture. Most of the products obtained from an agricultural product can be used to meet human needs. Commodities from this type of agriculture can also be divided into two groups.

The two groups include agricultural products and forestry products. Examples of agricultural products include soybeans, rice, sugar, corn, wheat, coffee and so on. Examples of forestry products are rattan palm, rubber and so on.

In conducting trade, products from agricultural commodities will be calculated using units of ounces, kilograms, tons and bushels.

This book will discuss about papaya cultivation. Today, the papaya cultivation business is excellent throughout the world, because it is a high-value trade commodity. The benefits of papaya enzymes have very high economic value and there are lots of requests from various companies both domestically and from abroad.

4. Ranch

The last type of commodity is livestock. Livestock products are products that come from livestock products. Includes live animals.

Examples such as meat, milk and food. Examples of maternal livestock type commodities are cows, beef, cow’s milk, chicken, chicken meat, pork, pork, animal feed and so on. In conducting trade, it is announced that this type of livestock will be traded in pounds.

Commodity Type

The type or classification of commodities can be seen from their nature. Based on their nature, commodities are divided into 2 types. The two types are hard type commodities and soft type commodities.

Here’s the explanation:

1. Hard Commodities

Hard commodities are various variants obtained from natural products. Through activities such as mining or extraction. Such as petroleum, metals, and so on.

This type of commodity will mostly be dominated by various energy products. Examples include coal, natural gas, and oil. Therefore, it is not surprising that a country that depends on the export of these products will have a currency value that is very influential on volatility.

This applies to the volatility of commodity prices to the country or region that is exported by that country.

2. Soft commodities

Soft commodity types are product variants obtained from forestry, agriculture and livestock products. Examples include sugar, rice, soybeans, salt, rubber, cow’s milk, corn, coffee beans, fish, palm oil, chicken meat, teak wood and so on.

The price of this type of soft commodity has a volatile movement. This means that the price can rise and fall suddenly. This is caused by the influence of natural conditions.

Therefore, the price of these commodities cannot be predicted with accuracy. This type of commodity also does not always exist in every region and country. This is also due to natural conditions. Such as the influence of climate and weather.

Commodity Trading System

Commodity trading system is different from trading in general. Commodity trading has a slightly unique system. In general, the selling price of a product will be determined by the producer or the seller, in contrast to the commodity trading system.

Commodity prices depend on the amount of demand and supply from the market. Price fluctuations have become a risk that is generally felt by commodity traders.

The occurrence of an increase or decrease in prices can occur due to several factors. Some of these factors include weather conditions, intensive or government restrictions, production capacity, seasons, political situation and so on.

That’s what will make commodity trading have a futures contract. It will consist of basic standards. On the minimum quantity and quality of commodities to be traded later.

When it comes to commodity trading, there are two types of trading that generally exist in this market. First, known as the producer. Second, known as speculators. The two things have a fairly significant difference.

For a producer, futures contracts will be used to hedge the value or price of a commodity. This is done until the contract period is over.

Examples of commodity traders with this type are soybean farmers. It hedges against the risk of price loss. This is done if the price of soybeans will fall before the harvest season arrives.

Through a futures contract, the farmer will be able to sell soybeans while they are still planted. This makes the selling price more determined until the harvest comes later.

As for speculators, they are traders in the commodity market. The trader carries out trading activities. The goal is to make a profit. Speculators will take advantage of relying on a price fluctuation.

Therefore, speculators generally do not have futures contracts. However, it can be profitable. This is done by taking advantage of fluctuating commodity prices.

That’s a brief description of the commodity. Starting from the understanding of commodities in general, the understanding of commodities in language, the understanding of commodities in economics, the types, to the trading system.

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