Goods and commodities are used interchangeably but both are little different from one another. In simple words, commodities are raw materials used to produce goods. Both commodities and goods are traded in different manner in the market. Commodities are traded in huge amount in exchange. International trade is a very vast domain and goods and commodities are one aspect of it.
An item should fulfill few conditions before it can be stamped with a label of commodity. It must be in raw form and must usable when purchased. Prices must vary to create a market for the item. It should be regulated and standardized. Commodities do have an impact on economies and consumers alike.
Commodities are sold in the cash market at the current price of the market. Transaction is completed instantly. Another option is to buy and sell commodity in the future market. Future market works on contract where buyers and seller sign the contract to buy and sell an asset at a fixed price in the future. This saves them from negative price changes that could have led to losses. This is why they prefer to trade commodities in future markets.
The changes in the rates of foreign currencies do have an impact on the prices of commodities in future market. Changes in the prices of commodities can make an impact on complete economic segment. Government had to intervene and give subsidies and reduce tax to keep the price stable for consumers. Stability in commodity exchange proves to be beneficial for companies, producer and manufactures.
Exchange of finished products between two parties are known as goods trading. Goods trading take place between different countries regions and companies. The main purpose of goods trading is to meet the needs of the buyers. Retailers, Distributors and consumers are involved in goods trading where retailers sell products from a store to consumers.
Distributors bring products from manufacturers to the retailer’s store. Consumer buys products from retailer. It is complete cycle in which consumer have to pay the highest price due to the involvement of these stakeholders. Although, the prices of goods produced by manufacturer is low because they produce it in bulk to keep the price down but the prices doubles when it reaches the consumer. All the stake holders play a key role in supply and demand balance of the goods trading.