Commodity

Interchangeability is the defining property. A barrel of a stated crude grade is the same barrel whoever produced it, and a fixed weight of refined gold of a stated purity is the same metal whoever took it out of the ground. That is why a commodity can carry one world price at all, and why its news flow is about how the material is produced, stored, moved and consumed rather than about the fortunes of any producer.

The conventional division is into hard commodities, which are extracted, and soft commodities, which are grown. Metals sit inside the first group and split again by use: some are held largely as a store of value, some are consumed by industry, and several are both, which is why a single metal price can respond to a monetary story one week and to manufacturing output the next.

A contract for difference written on a commodity references the price and delivers nothing. No barrel arrives, nothing is stored on the holder's behalf, and the economics of storage reach the position through the price of the contract it references rather than through a warehouse. Where that contract is a dated future, the reference has to be replaced as the date approaches, and the difference between the two contracts is a feature of the calendar rather than a market move.