Agricultural Commodities
Agricultural commodities are the foundation of global trade, feeding billions and supplying industries from food to textiles and biofuels. Their role is set to grow as the OECD-FAO projects a 14% rise in agricultural and fish production by 2034.
Commodity Categories
Agricultural commodities are typically divided into five broad categories. Each plays a unique role in global markets, but they often overlap. For instance, grains like corn are used for both food and animal feed, while oilseeds supply both edible oils and protein meal for livestock.
- Grains: wheat, corn, rice, barley, oats
- Oilseeds: soybeans, rapeseed, sunflower
- Livestock: cattle, pigs, poultry
- Animal by-products: milk, butter, hides, whey
- Tropical commodities: coffee, cocoa, sugar, cotton, wool
These categories are interconnected, reflecting the complex global demand for food, feed, fuel, and fibers.
Historical Perspective
The history of agricultural trading is as old as human civilization, but modern exchanges began with the Chicago Board of Trade (CBOT) in 1848. Futures contracts, introduced in 1865, gave farmers and buyers a tool to hedge price volatility. By the 1970s, events such as the Soviet Union's mass grain imports reshaped the market in ways similar to China's demand for oil and metals today.
“At one stage, Moscow was buying a quarter of US grain crops …” — OECD-FAO Agricultural Outlook
Over time, CBOT merged with other exchanges to become part of the CME Group, today the largest derivatives marketplace. Agricultural futures remain crucial for stabilizing markets and ensuring global food supply.
Supply Chain: From Field to Fork
Agricultural commodities travel through a global supply chain that involves farms, processors, traders, and consumers. Each step adds value while managing perishability, logistics, and market risk.
Farm Production
Commodities originate on farms, where crops are planted, harvested, or livestock raised.
Processing & Milling
Grains are milled into flour, oilseeds crushed into oils and meals, and milk transformed into dairy products.
Transportation & Storage
Products are shipped by rail, truck, and sea; grains can be stored in silos while perishables need refrigeration.
Distribution & Consumption
End-users include households, food manufacturers, or industries like biofuels and textiles.
Key Characteristics
Despite their diversity, agricultural commodities share certain traits that define how they are stored, priced, and traded:
| Characteristic | Description |
|---|---|
| Perishability | Many items spoil quickly, requiring fast logistics and processing. |
| Seasonality | Harvest cycles create supply peaks and troughs across the year. |
| Weather Sensitivity | Droughts, floods, or pests can drastically impact yields. |
| Storability | Grains and oilseeds can be stored long-term, others like dairy cannot. |
| Substitutability | Some commodities are interchangeable, but quality and origin matter. |
Major Producers & Consumers
Global production is concentrated among a handful of large exporters, while emerging economies are the fastest-growing consumers. The OECD-FAO projects continued growth in protein demand and biofuel feedstocks by 2034.
Chart: Leading global producers of agricultural commodities, OECD-FAO Outlook 2025-2034.