7.3.5. Commodity Prices
A commodity is a good that the markets view to be largely equivalent across producers. For example, lemons are a commodity, because there isn’t a lot of difference among lemons between markets. The markets can assign a value to a standard delivery of lemons that is similar for all producers. Smart phones, on the other hand, are not a commodity, because the markets view some smart phones to be very different from other smart phones. Examples of commodities are wheat, corn, oranges, and oil.
Commodity prices are more volatile than other consumer products. They are largely driven by disruptions in supply and changes in global demand. Extended droughts or untimely storms will disrupt supplies in corn or wheat, and politics in the M