Commodities?
Thursday, October 16th, 2008 at
4:26 pm
Anthony V asked:
Why is it that both oil and unleaded oil are both classified as commodities if the latter is a processed version of oil? Isn’t a commodity an unprocessed product by definition?
Why is it that both oil and unleaded oil are both classified as commodities if the latter is a processed version of oil? Isn’t a commodity an unprocessed product by definition?
Tagged with: Classified • Commodities • Commodity
Filed under: Commodity Trading
Like this post? Subscribe to my RSS feed and get loads more!
The following are characteristics of a commodity
- indifferentiable (cannot be distinguished)
- reasonably high volume of trade
- price driven primarily by demand and supply and not by value additions alone
Hence, commodity need not always be unprocessed products.
even value added products with
-a significant amount of volume
-& and not much value differences between competing products
will be commodities
Say for example, even unleaded oil or bulk drugs