What is the 'Commodity Research Bureau Index - CRB'

The Commodity Research Bureau (CRB) Index acts as a representative indicator of today's global commodity markets. It measures the aggregated price direction of various commodity sectors. The index comprises a basket of 19 commodities, with 39% allocated to energy contracts, 41% to agriculture, 7% to precious metals and 13% to industrial metals.The CRB is designed to isolate and reveal the directional movement of prices in overall commodity trades.

BREAKING DOWN 'Commodity Research Bureau Index - CRB'

History of the CRB

After the Great Depression in the 1930s, trading activity in stocks, bonds, and commodity futures was beginning to show some life. However, traders and those interested in commodities found very few sources of comprehensive information were available to them. With that in mind, a journalist named Milton Jiler founded the Commodity Research Bureau, with the Futures Market Service as its first publication, according to the CRB website. He felt traders needed something that better reflected the overall price activity in the commodity markets. To solve this problem and improve trade transparency, the CRB Index was designed to provide a dynamic representation of broad trends in commodity prices.

In 1986 the New York Futures Exchange (NYFE) introduced the CRB Futures Price Index and quickly became the most watched contract on the exchange. Today several different brokers support commodity indices that track baskets of commodities to reflect price movements. Investors recognize them as a significant barometer of commodity prices and market access. For example, The Thomson Reuters Equal Weight Commodity Index is the CRB Index in its original equal weight from 1957.

Other Commodity Indices

The CBR is one of the original commodity index providers. Since its inception, many other providers have followed. For example, there is the Bloomberg Commodity Index, UBS Bloomberg CMCI, Reuters/Jefferies CRB, Rogers International and the S&P Goldman Sachs Commodity Index. All of these indices are designed to provide liquid and diverse exposure to actual commodities through futures contracts.

Commodities as an Asset Class

The three main asset classes are traditionally equities, or stocks; fixed income, or bonds; and cash equivalents, or money market instruments. More recently investment professionals have added commodities to the asset class mix. Some investment professionals feel they are beneficial to an investor's portfolio because they add diversification, inflation protection, and absolute returns. Others asset managers think commodities are a niche asset class that are subject to high price volatility. Regarding strategies, passive long-only indexes represent the highest exposure, according to a study by the CFA Institute. To this end, commodity indices such as the CRB are an invaluable tool to portfolio managers.

  1. Commodity Index

    A commodity index is an investment vehicle that tracks a basket ...
  2. Commodity Market

    The commodity market is a physical or virtual marketplace for ...
  3. Commodity Trader

    A commodity trader is an individual or business entity that focuses ...
  4. Exempt Commodity

    An exempt commodity is any commodity other than an excluded or ...
  5. Dow Jones AIG Commodity Index (DJ-AIGCI)

    The Dow AIG Commodity Index (DJ-AIGCI), now called the Bloomberg ...
  6. Exchange-Traded Commodity (ETC)

    An exchange-traded commodity (ETC) gives traders and investors ...
Related Articles
  1. Trading

    Commodities Continue to Climb

    The chart of the Thomson Reuters/CoreCommodity CRB Index (CRB) suggests upside potential for commodities.
  2. Investing

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  3. Investing

    Commodities: The Portfolio Hedge

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

    Top 3 Commodities ETFs for 2018

    Commodities ETFs are a great way for investors to jump into the sector while avoiding some of the volatility that tends to befall the individual stocks. Here are three with momentum.
  5. Investing

    DBC: PowerShares DB Commodity Tracking ETF

    Find out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts.
  6. Investing

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  7. Investing

    Citigroup, Goldman Stay Bullish as Commodity Glow Fades

    Banks tell investors to stay bullish about commodities.
  8. Investing

    DBC Vs. GSG: Comparing Commodities ETFs

    Analyze two of the most widely held commodity index ETFs, and see how they stack up against each other.
  9. Financial Advisor

    Should You Invest In Stocks Or Commodities In 2014?

    It's the dawn of a new year and investors are facing an array of fresh challenges. One of the intriguing investment parlor games is to contemplate whether stocks or commodities loom as the vehicles ...
  10. Investing

    What are Commodities?

    A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commonly traded commodities include gold, beef, oil, lumber and natural gas. Additional ...
  1. What is the history of futures?

    Explore the history of futures trading and the origin of the major commodity futures trading exchanges in England and the ... Read Answer >>
  2. Is fiat money more prone to inflation than commodity money?

    Learn more about commodity and fiat money and some of the differences between them. Find out when the U.S. abolished the ... Read Answer >>
  3. How is the price of a derivative determined?

    Learn how different types of derivatives are priced, including how futures contracts are valued and the Black-Scholes option ... Read Answer >>
Trading Center