Jurisdiction(s):
United Kingdom

Key definition

Commodities definition

What does Commodities mean? In legal practice, commodities describes fungible raw materials and primary products—such as crude oil, natural gas and power, metals (ferrous and non‑ferrous) and agricultural products—standardised for physical and derivatives trading. The term is descriptive and used across multiple legal contexts, rather than having a single statutory definition. However, in financial regulation, commodity derivatives are defined and regulated under retained UK MiFID and UK EMIR, and in Ireland under EU MiFID II and EMIR, with related rules under UK MAR/EU MAR for market abuse in commodity and related derivatives markets. Key legal features include standard specifications of quality/grade, delivery terms (often via...

Structured commodity finance: security over goods, documents of title, collateral control, enforcement, market hedging, ESG and regulatory risks across the supply chain

Published by a LexisNexis Banking & Finance expert

Practice notes

The nature and types of commodities

Commodities come in various forms yet share defining traits. They are raw or barely processed materials typically used to make other products. Think of grains and cocoa turned into foodstuffs or agricultural outputs, or crude oil refined into petroleum products. Commodities may be traded on organised exchanges; for instance, the London Metal Exchange lists base metals. While many are suitable for exchange trading, most deals occur privately within the supply chain, even when prices are set by reference to an external commodity price index, which generally aligns with futures prices on exchanges.

Commodities are fungible, meaning items of the same type can be swapped. They are often graded for quality and must satisfy minimum standards to be eligible for exchange trading.

'Softs' or agri-commodities, covering grains and other agricultural commodities (such as cocoa, coffee, soybeans, sugar and wheat)
Metals, including base metals (for example, copper, nickel and tin) and precious metals...

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Web page updated on 22/05/2026

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