Commodities Exchange

AAA

DEFINITION of 'Commodities Exchange'

An entity, usually an incorporated non-profit association, that determines and enforces rules and procedures for the trading of commodities and related investments, such as commodity futures. Commodities exchange also refers to the physical center where trading takes place.

INVESTOPEDIA EXPLAINS 'Commodities Exchange'

Modern commodity markets began with the trading of agricultural products, such as corn, cattle, wheat and pigs in the 19th century. Modern commodity markets trade many types of investment vehicles, and are often utilized by various investors from commodity producers to investment speculators.

For example, a corn producer could purchase corn futures on a commodity exchange to lock in a price for a sale of a specified amount of corn at a future date, while at the same time a speculator could buy and sell corn futures with the hope of profiting from future changes in corn prices.

RELATED TERMS
  1. Baltic Exchange

    An exchange that handles the trading and settlement of both physical ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with ...
  3. Exchange

    A marketplace in which securities, commodities, derivatives and ...
  4. Seller's Option

    The right of a forward contract seller to choose some of the ...
  5. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  6. Commodity Futures Contract

    An agreement to buy or sell a set amount of a commodity at a ...
RELATED FAQS
  1. Do hedge funds and mutual funds invest in commodities in high inflation environments?

    Hedge funds and mutual funds are very different types of investment vehicles.The contents of a hedge fund are determined ...
Related Articles
  1. Options & Futures

    An Overview Of Commodities Trading

    Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. Investing in commodities can quickly degenerate into gambling or speculation ...
  2. Economics

    What Is Wrong With Gold?

    Despite its historic and symbolic appeal, this metal is simply a commodity. Here we explore its meaning as an investment.
  3. Active Trading

    Commodities: The Portfolio Hedge

    These diverse asset classes can provide downside protection and upside potential. Find out how to use them.
  4. Options & Futures

    Trading The Soft Commodity Markets

    Learn the contract specifications for a few of the most heavily traded commodities.
  5. Options & Futures

    A Beginner's Guide To Hedging

    Learn how investors use strategies to reduce the impact of negative events on investments.
  6. Options & Futures

    Commodities That Move The Markets

    Find out how the everyday items you use can affect your investments.
  7. Mutual Funds & ETFs

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  8. Insurance

    Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  9. Investing

    Is the Best Plan for Pot Investing 'Wait-and-see?'

    Legalized marijuana is an emerging industry and those interested in investing in it should proceed with caution.
  10. Options & Futures

    Give Yourself More Options With Real Estate Options

    Real estate options have many benefits, including a smaller initial capital requirement.

You May Also Like

Hot Definitions
  1. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  2. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  3. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  4. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  5. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  6. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
Trading Center