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Trading basics
What Are Commodities? Types and How They Trade
What are commodities? They are raw materials and primary products, such as crude oil, natural gas, gold, copper, wheat and coffee. Exchange futures on a commodity use standardised specifications for quality, quantity and delivery, so contracts for the same delivery month on the same exchange are interchangeable. The main groups are energy, metals, agriculture and livestock.
In brief
What are commodities?
What are commodities? A plain guide to the main groups, how each commonly trades and the contract details to check before you trade.
Key takeaways
- Commodities are raw materials and primary products, grouped as energy, metals, agriculture and livestock.
- Commodities commonly trade as exchange futures, in spot or over-the-counter markets, through ETFs, or as CFDs. Each route has different costs and rules.
- A futures contract is standardised, so its unit, tick size, contract months and expiry rule matter as much as the price.
- Commodity prices move with supply, demand and currency conditions. This guide does not forecast them.
- RTX5 has no evidenced commodities or futures trading feature, so check the product-availability record before relying on any RTX5 feature.
What are commodities? The main groups
Commodities are raw materials or primary products. The CFTC glossary describes a commodity as a physical good, such as an agricultural product or a natural resource, set against financial instruments such as currencies or interest rates.
The groups below are the ones most traders meet. Some markets overlap, and whether an instrument is available depends on your broker and your country, not only on the commodity itself.
| Group | Typical examples | How it commonly trades | What to check |
|---|---|---|---|
| Energy | Crude oil, natural gas, heating oil | Exchange futures, spot and OTC, ETFs, CFDs | Grade and delivery point differ by contract. |
| Metals | Precious: gold, silver, platinum. Industrial: copper, aluminium, zinc, nickel | Exchange futures, spot and OTC, ETFs, CFDs | Contract size, delivery terms and trading hours vary by exchange and contract. |
| Agriculture | Grains: wheat, corn, soybeans. Softs: coffee, cocoa, sugar | Exchange futures, OTC, ETFs, CFDs | Harvest timing can change supply, so check the contract months. |
| Livestock | Live cattle, lean hogs | Exchange futures, OTC, CFDs | Check whether your broker offers the contract at all. |
Groups and examples are general. Venues are named as examples only. Availability depends on your broker and country. This is not a list of products RTX5 offers.
How commodities trade: futures, spot, ETFs and CFDs
The most common route into commodities is the futures contract. The CFTC glossary describes a futures contract as "An agreement to purchase or sell a commodity for delivery in the future", at a price determined when the contract starts. The same entry says it may be satisfied by delivery or by offset, which means closing the position with an equal and opposite trade in the same delivery month.
The CFTC glossary describes the cash market as the market for the physical commodity, as contrasted with a futures contract. It can be an organised exchange, a decentralised over-the-counter (OTC) market or a local buyer such as a grain elevator. The spot market is the market for immediate delivery and payment. OTC deals are agreed between two parties, so their terms depend on the counterparty rather than on a standard exchange specification.
ETFs and CFDs give price exposure without physical delivery. An ETF is a fund that holds commodities or futures, and its price follows the fund's own rules. A CFD pays the price change between opening and closing, and it is usually leveraged.
Crude oil trades in a global market. The EIA notes that prices of the many crude streams produced worldwide tend to move closely together. For how the two main oil benchmarks differ, read WTI vs Brent crude.
Gold hours depend on the venue and the contract, so check them before you plan a trade. The gold market hours guide covers the main points.
How to check a contract specification before you trade
A commodity price means little until you know the unit it refers to. Every futures contract has a specification that sets its size, its smallest price step, the months that trade and how the contract ends. Two contracts for the same commodity can differ, so read the specification for the exact contract you plan to trade.
- Contract unit: the quantity covered by one contract, such as a number of barrels.
- Tick size: the smallest price movement, and what one tick is worth in your account currency.
- Contract months: which delivery months are listed and when trading in each one stops.
- Settlement or delivery: whether the contract is cash settled or delivered physically, and where.
- Trading hours: the exchange session times, which can differ from the spot market.
| Specification | Value | Source |
|---|---|---|
| Contract size | 1,000 barrels | ICE product specification |
| Minimum price fluctuation | One cent (US$0.01) per barrel | ICE product specification |
| Contract series | Up to 156 consecutive months, or as the exchange determines | ICE product specification |
| Expiry | Trading ceases on the last Business Day of the second month preceding the contract month | ICE product specification |
Verified on 9 November 2026 from the ICE Brent Crude Futures specification page. Specifications can change, so check the current exchange page before trading.
Example: at a US$0.01 tick on 1,000 barrels, one tick is worth US$10 per contract before fees (1,000 x US$0.01). A US$1.00 move per barrel is 100 ticks, or US$1,000 per contract. The arithmetic is exact, but the price move is illustrative and not a forecast.
Commodity risks: leverage, gaps, delivery and currency
Commodity prices can move sharply. Futures and CFDs add leverage, because a deposit controls a larger contract. A move against you can cost more than the margin you put up, especially on a futures position.
Other risks are specific to the market. Prices can gap on news or at the open, a contract can become harder to trade near expiry, and physical delivery brings obligations for storage and transport. If a contract is priced in a different currency from your account, currency moves add a second layer of risk.
Where commodities fit beside stocks and forex
Commodities are one part of a wider market picture. Index and single-stock futures are a different group, covered in what are stock futures. Each instrument has its own specification, so compare terms rather than assuming that one account treats every market the same way.
The IMF publishes monthly commodity price data through its Primary Commodity Prices System. Those series are useful for history and context. They do not show what a contract will do next.
Risk disclosure
- Commodity prices can move sharply on supply, demand, weather, policy and currency news. This guide does not forecast them.
- Futures and CFDs are leveraged. A small move against you can remove much of your margin, and losses on futures can exceed the margin you deposit.
- Contract specifications, trading hours and expiry rules differ by exchange and by contract. Read them before you trade.
- Physical delivery, where it applies, brings obligations for storage, transport and quality. Check how a contract ends before you open it.
- Availability of commodity products depends on your broker and your country. This page is educational and is not personal financial advice.
RTX5 status
RTX5 is Orrnn's trading terminal and broker-technology product. Its Windows desktop client is in preview, and the web and mobile clients are planned. A Google Play listing for Android is published, but the mobile client has no approved release record yet; check the product-availability record before relying on any RTX5 feature. RTX5 has no evidenced commodities or futures trading feature. RTX5 is not a broker and does not hold client money. The Brent figures on this page come from the ICE specification, not from an RTX5 feature.
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Primary references
Sources were checked on 9 November 2026. They explain market rules and concepts; they do not certify RTX5 or provide individual financial advice.
CFTC Glossary (commodity, futures contract, fungibility, cash market, spot and offset)Supports the descriptions of a commodity, a futures contract, fungibility of standardised futures, the cash market, the spot market and offset used in this guide. Checked on 9 November 2026.ICE Brent Crude Futures product specificationSupports the example specification table: 1,000 barrels, a one-cent tick per barrel, contract series of up to 156 months, and expiry on the last Business Day of the second month preceding the contract month. Checked on 9 November 2026.EIA: Crude oil spot pricesSupports the statement that crude oil trades in a global market and that prices of many crude streams tend to move closely together. It does not cover the WTI or Brent benchmark details, which sit on the linked sibling page.EIA: Oil and petroleum products explainedSupports describing crude oil and petroleum products as energy fuels. It does not explain how their prices are set.IMF Primary Commodity PricesSupports the statement that the IMF's Primary Commodity Prices data are updated monthly.RTX5 product availabilityRTX5 status record. Use it to check which RTX5 products and clients are live before relying on any feature.
Questions readers ask
What are commodities in simple terms?
Commodities are raw materials and primary products, such as crude oil, natural gas, gold, copper, wheat, coffee and live cattle. On an exchange, a commodity trades through standardised futures contracts that fix the quality, quantity and delivery terms, so contracts for the same month are interchangeable. The main groups are energy, metals, agriculture and livestock.
What are the main types of commodities?
This guide sorts commodities into four groups: energy, metals, agriculture and livestock. Energy covers crude oil and natural gas. Metals include precious metals such as gold and silver and industrial metals such as copper and aluminium. Agriculture covers grains such as wheat and softs such as coffee, cocoa and sugar, and livestock covers cattle and hogs.
How do you trade commodities?
The main routes are exchange futures, spot and over-the-counter deals, exchange-traded funds and CFDs. Futures are standardised and listed on an exchange. OTC deals are agreed between two parties, so their terms depend on the counterparty. ETFs hold exposure through a fund, and CFDs pay the price change without delivery. Availability depends on your broker and country.
What is a futures contract?
The CFTC glossary describes a futures contract as an agreement to purchase or sell a commodity for delivery in the future, at a price determined when the contract starts. It may be satisfied by delivery or by offset, an equal and opposite trade that closes the position. Each contract has its own unit, tick size and expiry rule, so check the specification before you trade.
Do commodity prices show what will happen next?
No. Historical price series, such as the IMF's monthly commodity data, show past movements and are useful for context. They do not predict the next move. Commodity prices respond to supply, demand, weather, policy and currency conditions, and those factors can change quickly. Treat any forecast as a view, not a fact.
Keep learning
What are stock futures?How index and single-stock futures differ from commodity futures.WTI vs Brent crudeThe two main crude oil benchmarks and how their prices relate.Gold market hoursWhen gold trades, and why session times depend on the venue.What is a CFD?How a contract for difference pays the price change without owning the asset.Multi-asset tradingAn overview of trading more than one asset class.