Commodities (or commodity, singular) is an English term that means merchandise.
In economic studies, this word is used to designate products of primary origin.
These products have great value on the world market and can be stored for a long period of time.
In other words, commodities are essential raw materials for human consumption and that can be stored without losing quality.
They are produced on a large scale like coffee, soy, meat, oil, etc. and traded on the world market.
Therefore, these are products that attract the attention of large investors, as prices and demand tend to vary.
Note that your shares are traded on the stock exchange. Thus, commodity prices are standardized and show daily fluctuations which are based on international supply and demand.
Types
Commodities are classified into four basic types:
- Financial Commodities: include currencies, eg dollar, euro, pound, real, etc. This category also includes federal government bonds.
- agricultural commodities: include products from agribusiness, for example, soy, corn, coffee, wheat, sugar, etc.
- Mineral Commodities: bring together various minerals that are extracted or produced, for example, oil, gold, silver, aluminum, nickel, natural gas, ethanol, etc.
- Environmental Commodities: related to the environment, they include various natural resources such as water, wood, carbon credits, energy, etc.
Brazilian Commodities
Brazil is a country that produces and exports several commodities. Mineral, agricultural and environmental commodities stand out.
Agribusiness in Brazil has grown exponentially in recent years. Products such as soy, coffee and meat are those that provide the greatest profit for the foreign market.
In addition, different types of ores are extracted and exported outside the country, for example, iron, aluminum and oil.
Therefore, we must emphasize that even though commodities have a great impact on Brazil's economy, the country is at the mercy of fluctuating values and demands for these products in the world market.
That is, the profit can be big when the market is with favorable prices. But, on the other hand, it can considerably affect the country's economy.
This fact explains why in less favorable times the prices of some products rise a lot.
Even the country producing these products, when the value and demand rise in the world market, the internal economy is affected and the ones who suffer most are the citizens.
Thus, difficulties arise for the acquisition of these essential products, since several commodities are at high prices.
Thus, when a global crisis occurs, company profits are affected, as a result of the devaluation of commodities in the international market.
Read too:
- Market economy
- Planned economy
- Sectors of Economy
- Economy of Brazil
- Economic Crisis in Brazil