Barnes Fuels Ltd. is an International Oil, Gas and Commodity Brokerage Company
What Are Commodities?
Commodities are essential goods and materials that are widely used.
Commodities can be either raw materials or agricultural products, which, although sometimes good in their own right, are generally used as the “building blocks” for other goods and services. The word commodity, therefore, covers a myriad of different goods, from sugar to crude oil, from cotton to steel.
Commodities of the same type and quality tend to be interchangeable, or fungible, with each other and, therefore, hold the same value to consumers. For example, coffee produced in Colombia will have more or less the same value as coffee produced in Kenya, provided they are of the same quality.
10 Most Traded Commodities in the World Today
1: Brent Crude Oil
The first two entries on our list of the most traded commodities in the world should come as no surprise.
Despite moves towards greener energy in recent years, crude oil is still very much in high demand. It powers our cars, heats our homes, and produces fertilizers, pesticides, and plastic.
Brent Crude is one of two major types of crude oil that act as global benchmarks for the industry; the other is WTI crude. Brent Crude is extracted from the North Sea and is characterized as a light, sweet crude oil.
Light because of its low density and sweet because of its low sulphur content. Both of these qualities result in Brent Crude being relatively easy to refine.
2: WTI Crude Oil
West Texas Intermediate (WTI) crude acts as another benchmark for global oil prices and is also one of the most widely traded commodities in the world.
It is drilled in various states throughout the US and is also described as both sweet and light, having even lower sulphur content and density than Brent Crude.
The prices of both WTI and Brent Crude have historically had positive correlations with global economic growth. When the economy is growing, demand for oil inevitably increases, which drives up its price.
3: Natural Gas
Natural gas is another important source of global energy that is found deep below the surface of the earth. Although a non-renewable energy source, natural gas is the cleanest-burning fossil fuel and is very versatile, meeting a lot of the same needs as crude oil.
As the world cuts emissions in an attempt to reach net zero by 2050, the use of both crude oil and natural gas will inevitably need to be curtailed. However, due to its producing lower emissions than oil, it is expected that natural gas will continue to be a major source of global energy during the transition.
A precious metal that has been sought after for centuries, gold is now primarily used for jewelry production and as a vehicle for investment and is primarily mined in China, Australia, Russia, and the US.
Gold is one of the most traded commodities in the world, but in times of uncertainty, it often becomes even more popular with investors. This is because it is considered a safe haven asset, meaning that it tends to retain value or even rise in price during times of economic and political upheaval.
Another precious metal, silver, has also been historically sought after by mankind for many centuries. Unlike gold, around half of silver’s demand arises from its industrial uses, such as solar panels and electrical products.
However, like gold, a lot of its demand is controlled by jewelers and investors. While silver is also considered a safe-haven asset, it is not seen as being as reliable as gold due to the fact that gold's value is less dependent on industry.
Copper is a very important metal in the modern world. Due to its characteristics as an excellent conductor of electricity and heat, it is widely used in the electronics and building industries.
Chile is an important producer, accounting for almost a third of total global production in 2020. Peru, China, and the US, to name a few, are also important, though smaller, producers.
Due to its use in manufacturing, the price of copper is highly dependent on economic output, and consequently, demand for the base metal is seen as a reliable indicator of economic health, earning it the nickname “Dr. Copper”.
With an estimated 2.25 billion cups drank a day across the globe, it should come as little surprise that coffee is one of the most traded commodities in the world. Coffee beans are grown in more than 50 countries, in what is known as the “coffee belt”, with Brazil being the largest producer in the world.
There are two main varieties that account for the vast majority of coffee production: Arabica and Robusta. Arabica is generally considered to be of higher quality, making it more popular, accounting for around 60% of total coffee consumption.
When it comes to trading, Arabica tends to have more stable pricing, while the price of Robusta is generally more volatile.
Once a luxury reserved for the wealthy, sugar has long been a highly sought-after commodity. Its use in food and drinks all over the globe, together with other lesser-known uses, such as in medical equipment and beauty products, makes sugar one of the most widely traded commodities on the market.
Although sugar is far more accessible these days, it is still considered somewhat of a luxury good, meaning that, as with other commodities on this list, its demand and therefore price tends to be positively correlated with economic performance.
The next of the most traded commodities on our list, Cocoa, is used to produce one of the world’s favorite products, chocolate!
Production of cocoa is mainly concentrated in West Africa, Africa, and Latin America, with West Africa accounting for 70% of global production. The vast majority of commodities are traded in US dollars, however, cocoa is one of the last remaining Commodities that is still typically traded in British pounds.
The majority of people reading this article will most likely be currently wearing at least one item of clothing made using the final item on our list of the most traded commodities in the world.
But besides clothing and household items, cottonseed is also used as feed for livestock, it is made into oil, which is subsequently used in the manufacturing of soap, margarine, rubber, and plastics. Linters, which are fibers found on cottonseed, are also used to make bandages and banknotes. India, China, and the US are the three largest producers of cotton in the world.
Other Popular Commodities
A sample of petroleum. Pumpjacking an oil well near Lubbock, Texas, United States. An oil refinery in Mina Al Ahmadi, Kuwait. Petroleum, also known as crude oil or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons and is found in geological formations.
The soybean, soy bean, or soya bean is a species of legume native to East Asia, widely grown for its edible bean, which has numerous uses. Traditional unfermented food uses of soybeans include soy milk, from which tofu and tofu skin are made.
Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus Triticum; the most widely grown is common wheat.
Maize, also known as corn in North American and Australian-English, is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago.
Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Chemically, precious metals tend to be less reactive than most elements. They are usually ductile and have a high luster.
Steel is an alloy of iron and carbon with improved strength and fracture resistance compared to other forms of iron. Many other elements may be present or added. Stainless steels, which are resistant to corrosion and oxidation, typically need an additional 11% chromium.