Two distinct categories of
commodities
underlie futures contracts — consumable and financial. Historically, futures contracts were for consumable commodities — commodities that are the raw materials literally consumed in production processes that create food, fuel, clothes, cars, houses, and thousands of other products that consumers buy. Futures contracts were, and still are in many cases, a way to help protect the producers and users of the consumable commodities — the gold miner and the jeweler, the oat grower and the cereal maker — from the risk of price fluctuations.
Though you may not think of currencies
or
Treasury bonds
as commodities, they are. Money is
as much the raw material of domestic
and international trade, as wheat
is the raw material of bread.
The value of a currency concerns
people whose businesses depend
on the money supply, or on what
imported materials will cost.
There are four basic categories
of financial commodities that
are the subject of futures contracts:
