Commodity market trades in the primary economic sector rather than manufactured products. This is a physical or virtual marketplace for buying, selling and trading raw or primary products. There are currently about 50 major commodity markets worldwide that facilitate investment trade in approximately 100 primary commodities. Commodities are divided into two main types – hard and soft commodities. Hard commodities are natural resources that must be mined or extracted (such as gold, rubber and oil). Soft commodities are agricultural products or livestock (such as corn, wheat, coffee, sugar, soybeans and pork).
Commodity traders either take positions based on forecasted economic trends or arbitrage opportunities in the commodity markets. Oil and gold are two of the most commonly traded commodities.