What are commodities? Understand now!

Understand once and for all what commodities are and the main types

Do you know what commodities are?

We are hearing this word more and more in the news.

However, what many people don't know is that this term is more present in our daily lives than we imagine. In fact, commodities impact your budget!

With that in mind, let’s talk about everything on the subject. Keep reading to find out more.

What are commodities?

The term “commodities” comes from the English language and simply means “goods”.

A few years ago, the term was used in exactly this sense, to refer to goods in general.

However, with the advancement of globalization, the term gained new characteristics and thus began to be used to refer to commodities made from basic raw materials.

Because they are products consumed on a large scale and suffer from considerable price variation, they can also be seen, in some situations, as an investment.

We are talking about global consumer goods and, therefore, they are traded worldwide on stock exchanges.

In addition to large-scale production, a commodity's main characteristics include quality and uniform production features, great importance worldwide, the ability to be stored, among others.

What are the main types of commodities?

Commodities are classified into four basic types:

Financial commodities

These commodities represent government-issued bonds and currencies that are traded on the market.

That is, this includes currencies such as the dollar, euro, pound and Federal Government public bonds, such as the Direct Treasury.

Agricultural commodities

Agricultural commodities come from agricultural practices with a low level of industrialization.

In other words, they are agricultural goods, such as soybeans and coffee, for example.

When it comes to the market, such products have standardized characteristics and no differentiation of origin.

Commodities, in general (including agricultural ones), are normally used as raw materials in the production of other products.

In Brazil, agricultural commodities have grown considerably in recent years. These products are very important for our country's trade balance.

In fact, they are one of the reasons why Brazil is one of the largest food exporters in the world.

Mineral commodities

These commodities are very important for today's market.

As the name suggests, they are related to mineral goods, such as natural gas, oil, gold, silver, aluminum.

Environmental commodities

They are goods originating from natural resources, essential for agricultural and industrial production.

These natural resources are divided into seven matrices:

· Water;

· Energy,

· Biodiversity;

· Forest (wood);

· Ore;

· Recycling;

· Reduction of pollutant emissions (in soil, water and air).

The list of the seven matrices was taken from the Diálogos do Sul website.

What are the main Brazilian commodities?

Brazil has a prominent position in the international commodities market.

For this reason, our country's economy is strongly influenced by this sector.

And now that you know what this means, it's time to find out what the main commodities produced in Brazil are:

1. Soybeans

Brazil is the largest producer and exporter of soybeans in the world.

In 2021, according to CONAB, it was harvested the record soybean harvest in Brazill with production of 135.9 million tons.

This commodity is used as raw material for food production.

The Brazilian states that stand out most in soybean production are Mato Grosso, Paraná, Rio Grande do Sul and Goiás.

2. Iron ore

Brazil, which has one of the largest iron ore reserves in the world, is also a major exporter.

Between January and November 2021, more than R$37 billion were traded abroad.

China is responsible for purchasing more than half of this merchandise.

Pará is the state that exports the most iron ore.

3. Crude oil

Brazil is the seventh largest oil exporter in the world!

Petrobras, the country's main state-owned company, is the eighth largest company in the oil and gas sector. In addition, its market value reached R$437.7 billion.

4. Sugar and molasses

Currently, Brazil is the world's largest producer of sugar cane.

Brazilian sugar production in the new 2022/23 season it should increase by 15%.

What are Brazil's largest commodity exporters?

Due to their importance, commodity producers and exporters frequently appear among the largest companies listed on the stock exchange.

In the list below, you can see which companies these are, their estimated market value in 2021 and their weight in the Ibovespa index (main performance indicator of shares traded on B3):

Is it possible to invest in commodities?

If you want to start investing in commodities, the first step is to open an account with a brokerage firm.

Brokers provide investment platforms, allowing investors to access various types of financial products, with fixed income and variable income assets.

To invest in commodities, it is also important that you understand about futures markets, which as the name suggests, is an environment in which futures contracts are negotiated, that is, purchase and sale agreements with a specific value and period.

At the brokerage itself, you can search for available operations through categories, such as fixed income, variable income, among others.

In addition to choosing an accredited broker, it is very important that before investing in commodities, you know your investor profile and always be informed about the market situation.

After all, commodities are a variable income market and there are risks that commodity prices will change.

Conclusion

Now you know what commodities are and how these items can impact your pocket.

It is important to highlight that they are very volatile, that is, they suffer considerably from price fluctuations.

Such variations can cause products made with these raw materials to also increase in price.

For you to really understand what is behind the variations in the prices of these products, it is very important that you always follow the market situation, through newspapers, specialized websites and other reliable sources!