Commodities are one of the more traditional and diverse asset classes and offer a variety of trading opportunities. In our guide, you'll discover the most popular commodities that are traded across the globe.
Categorised under various types, you'll find a range of assets available to trade with Tradu, including the most commonly traded commodities in the world.
- Crude oil
- Coffee
- Natural gas
- Gold
- Silver
- Sugar
- Cocoa
- Cotton
Tradable commodities can be categorised into three varieties, depending on their use. These are energy, agricultural and metals. Whilst each asset features a set of different characteristics, all commodities are generally both deliverable and tradable. The commodity market is also highly liquid, with a large number of both buyers and sellers.
Whilst it is possible to receive delivery of the actual physical product when trading commodities, using financial derivatives to speculate on the price is a popular way to invest in the market.
You can read more in our guides to types of commodities and how to trade commodities.
In any market, the value of a commodity is determined by supply and demand. If the supply of a product increases, the price will usually decrease and vice versa.
These factors can also be heavily influenced by a range of other aspects including market sentiment, the economy and world events. A recent example is how the price of Russian oil has fluctuated over the past year due to the conflict with Ukraine.
Therefore, the most valuable traded commodity is liable to change, depending on market conditions.
You can discover more about what affects the value of commodities in our guide to what drives commodity prices.
Whilst the most popular commodities are subject to change on an almost daily basis, due to the reasons outlined above, there are assets that tend to remain amongst the most commonly traded commodities.
Although the oil market can be volatile, due to factors affecting supply and demand, it's one of the most popular commodities to trade. This is largely because it's the most consumed source of primary energy across the globe.
The two most globally significant tradable crude oils are Brent Crude and West Texas Intermediate (WTI).
This type of oil originates from the North Sea, with The Brent field producing approximately three billion barrels since production began in the Seventies. As of February 2023, the value was 80.99 U.S. dollars per barrel, with Brent oil setting the benchmark for much of the world's traded crude oil.
However, as Brent Crude oil reserves deplete, the planned decommissioning of the field could affect the value.
This quality oil is drilled mainly from Texas and, like Brent, serves as a benchmark for global oil prices. It is characteristically sweet and light, and easily refined and converted into diesel and gas.
The value per barrel was 74.11 U.S. dollars in February 2023 and it’s used as the underlying commodity for oil futures on the New York Mercantile Exchange (NYMEX).
Although oil remains in high demand globally, the focus on shifting to renewable sources of energy could threaten this. However, as oil is also a finite resource, a likely shortage could, conversely, help to maintain its value.
Coffee is a popular agricultural commodity, with South America being the largest producer in the world. Population growth and increased incomes are among the factors that have led to coffee being one of the most traded commodities in the world.
Lifestyle trends have also created a 'coffee culture' – the British Coffee Association reporting that 98 million cups are consumed every day in the UK and, of those who visit coffee shops, 80% make it a weekly habit.
There are various factors that can affect the value of coffee including supply, demand, investment in farms and production, and climate or weather conditions. The cost of production is also a crucial element and can include labour, transportation, packaging and export charges or taxes.
Like oil, natural gas is a fossil fuel and an energy commodity. There are many different types of natural gas such as biogas, deep natural gas and shale gas. It can also be classed as conventional or unconventional, depending on the difficulty of extraction.
Most of the world's natural gas reserves are in the Middle East and it offers a cheaper way to power a variety of appliances. Similar to other energy resources, natural gas is measured in volume and priced in currency per unit.
Because of its similarity to oil, its value is usually affected by the same factors.
Historically, gold has been one of the most valuable traded commodities across the globe. Viewed as a 'safe haven' during volatile economic conditions , gold is a physical commodity that's often in demand by investors.
A precious metal, gold is mined across almost every continent with China, Australia, Russia and Canada being the largest producers in 2022.
Gold's properties make it a popular metal – it doesn't rust, is malleable, has a high electrical conductivity and has an attractive aesthetic. As well as being a symbol of wealth, via bullions or decorative jewellery, gold is also utilised in electrical components and even health equipment.
Also a precious metal, nearly half of the world's silver production originates in Mexico, Peru and Chile. Although less valuable than gold, silver has similar uses with jewellery, tableware, electronics and industrial applications being the most common.
Whilst the silver market is smaller than the gold market, the same factors can create fluctuations. In general, the value of silver increases when overall demand for precious metals rises and during economic uncertainty. These aspects, alongside its properties, mean silver remains one of the most popular commodities to trade, particularly over the long-term.
Sugar is one of the most traded commodities by volume across most countries, with Brazil being the largest producer in 2021/22 at 37 million metric tons. Sugar cane and sugar beet are two crops that are used to produce this commodity, however, there is little difference to the end product.
As with many popular commodities, its value is determined by supply and demand with key influences including weather, farming investment and health trends. Sugar is predicted to become increasingly more available worldwide which, in turn, will reduce its value.
A staple ingredient for chocolate, cocoa beans are an in-demand commodity, particularly in countries such as the US and the UK. There are over 4 million tons produced annually with Ghana, Cote d'Ivoire and Ecuador being the main producers.
This popular commodity is traded in British pounds. The Intercontinental Exchange in London uses African cocoa to base its prices on, and the NYMEX uses South-Asia as its benchmark.
The value of cocoa can be affected by climate and local economies, amongst other factors. A significant issue has been the exploitation of farm workers, which has seen organisations such as Fairtrade set standards for companies and producers to increase workers' rights and protect the environment.
The world's oldest tradable crop, cotton is harvested in China, India and the U.S. This natural product is derived from the cotton plant which is then spun and woven to create the popular fabric.
Cotton features a variety of properties that make it a versatile commodity. It's soft, durable, breathable and extremely absorbent, making it ideal for clothing, bedding, soft furnishings and other fabrics.
Weather, economic conditions and even the price of oil (used in harvesting machinery) can affect the value of cotton. Like cocoa, cotton farmers often suffer from poor working conditions and are forced to compete with larger productions. This can also falsely inflate the market.
Whilst the above list features what are generally regarded as the most traded commodities in the world, other popular assets include wheat, corn, soybeans and copper.
Trading commodities can offer an array of opportunities that help to diversify your portfolio. Choose from a number of assets, including the most commonly traded commodities.
Discover more about trading commodities with our guides: