The role of commodities in modern life

Commodities and the global economy

There are numerous commodities in the world, and what they have in common is that it is very hard to imagine modern society without them. Commodities such as oil, natural gas, gold, and other precious metals are only a small part of the long list.

People all over the world have at least some knowledge about this sphere. It is not surprising because they became integral parts of modern societies. It is no coincidence that media outlets always pay attention to problems and challenges connected with oil prices etc.

The role of oil, gold, as well as other commodities,  is huge and it will be hard to ignore their importance to the global economy.

Let’s have a look at the oil and petroleum products. The recent attacks on Saudi Arabia’s oil facilities once more increased the interest in the oil industry. It is worth mentioning that for numerous countries the money they earn from selling oil is the major source of income.

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Saudi Arabia is the second-largest oil exporter in the world. It means that accidents in this country can disrupt oil supplies.

Another example connected with the significance of oil and commodities, in general, comes from the Strait of Hormuz. This strait is a strategic place for the oil industry. Regional tensions in the Middle East affected this place. This year several incidents between took place involving tankers. Several countries including U.S. U.K. and others deployed naval vessels to guarantee the safety and stability in the region.

The examples mentioned-above underline the role of oil and other natural resources.

Types of commoditiesOil and gold industries

It is hard to remember all commodities as there are a lot of them. However, it is desirable to know that there are three major types of commodities. Agricultural, energy, and metals.

The first type of commodities we will discuss is the agricultural commodities. There are six categories: cereal grains, oilseeds, meat, dairy, other soft commodities, and miscellaneous agricultural commodities.

Let’s start with cereal grains. This category includes wheat, corn, oats, etc. They are consumed by humans as well as animals.

The second category is the oilseeds. Farmers are growing them for the high oil content, and the meal that remains after the oil is extracted. This group includes palm oil, soybeans, canola, etc.

Now it is time to discuss the third category, which is the meat. This commodity is very popular in the world.

Let’s move to the fourth category, which is the Dairy. Dairy products such as milk, cheese, butter, and others are popular in many countries.

The fifth category is called other soft commodities. For example, cocoa and sugar are part of this category.

Now it is time to discuss and sixth and the last category when it comes to agricultural commodities. The examples of miscellaneous agricultural commodities are lumber, wool, and rubber.

As we can see, there are six categories and all of them are important for the agricultural sector. It is not surprising that people care about the price of agricultural commodities as their prices are affecting every person.

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