A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market. In contrast, one of the characteristics of a commodity good is that its price is determined as a function of its market as a whole.
There is another important class of energy commodities which includes electricity, gas, coal and oil.


Commoditization (also called commodification) occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. Commodities are often substances that come out of the earth and maintain roughly a universal price.[1] A commodity is fungible, that is, equivalent no matter who produces it. As such, goods that formerly carried premium margins for market participants have become commodities, such as generic pharmaceuticals and silicon chips.


Soft commodities are goods that are grown, while hard commodities are the ones that are extracted through mining.



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