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What is a commodity market?

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Quick Answer

A commodity market is a place where raw products are bought, sold and traded, says Investopedia. Commodity markets can exist as physical marketplaces and also as computerized exchanges.

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Commodity markets sell hard and soft commodities, reports Investopedia. Hard commodities are natural products mined or otherwise extracted from the earth. These commodities include gold, rubber and crude oil. Soft commodities are animal or farm products such as pork, corn, wheat and soybeans.

Commodity markets have a long history; the Chinese might have engaged in commodities trading as far back as 4000 B.C. Investing in commodities is risky because commodity prices are affected by sudden events that are impossible to predict.

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