For example, gold of 99.95% purity is the same from a trading point-of-view, regardless of which part of the world it was produced in. However, gold of 99.99% purity is different since it has higher purity.
Commodities can be agricultural or non-agricultural in nature. In the case of agricultural commodities, the specifications are often more elaborate and include stipulations on origin of the commodity, maximum permissible foreign particles, moisture content, etc.
Other examples of commodities include Brent Crude Oil, Electolytic Copper Cathode, Soyabeans, Sugar M-grade, Expeller Mustard Oil, and many more.
It should be noted that the value arises from the owner''s right to sell rather than the right to use. For example, television sets, automobiles and stereo systems are not commodities since their value is in their use and not in sale.
In the Indian context, commodities can be broadly classified under the following categories:
- Precious Metals: Such as Gold and Silver
- Base Metals: Such as Steel, Nickel, Tin, Iron, Copper, Zinc and Lead
- Energy Products: Such as Crude Oil, Furnace Oil, Natural Gas
- Plastics & Petrochemicals: Such as Polypropylene (PP), High Density Polyethylene (HDPE)
- Agricultural Commodities: These are varied and are classified in sub-groups such as:
- Cereals - like Wheat, Maize, Rice
- Pulses - like Chana (Gram), Urad (Black Matpe), Lemon Tur, Masoor, Field Peas, etc.
- Oil Complex - like Soyabeans, Soy Oil and Soy Meal, Mustard Seed and Oil, Crude Palm Oil, etc
- Spices - like Turmeric, Chilli, Black Pepper, Cumin, Cardamom
- Plantation Crops - like Coffee, Cashew, RubberFibres - like Cotton, Jute, Mulberry Cocoons, etc.
- Others - like Guar Seed, Guar Gum, Sugar, Gur (Jaggery), Mentha Oil, Potato, etc.