THE HISTORY OF THE COMMODITY MARKETS
Commodity related money and commodity markets in a crude initial stage are considered to have begun in Sumer from 4500 BC to 4000 BC. The Sumerians originally made clay tokens stored in a clay vessel; then they graduated to writing on clay tablets to print the amount thereon — for instance, the number of sheep or cattle, to be delivered. Those commitments as to the time and date of delivery resembled futures agreements. Early societies either used rare seashells, swine, or other precious items as commodity cash. Since then, traders have invented means of simplifying and standardising trade contracts.
Gold and silver markets developed during the classical ages. Initially, those precious metals were appreciated for their beauty and inherent value and were attributed to royalty. Eventually, they were utilised for trading and were traded in exchange for other commodities and things, or for paying salary of workers. Gold, given its value, consequently became a means of exchange. Gold, being rare and having a unique density, aside from being readily melted, moulded, and measured, became a natural trading medium as money.
Starting in the latter part of the 10th century, commodity markets increased as a system for distributing labour, goods, land and capital all over Europe. From the late 11th to the late 13th century, English urban growth, area specialisation, enhanced and increased infrastructure development, the increased utilisation of coinage and the propagation of markets and fairs were proof of the process of commercialisation. The expansion of markets is represented by the 1466 official use of dependable scales in the villages of Sloten and Osdorp in order for villagers no longer to go all the way to Haarlem or Amsterdam to determine the weight of their home made cheese and butter.
In the US in 1864, cattle, swine, wheat, and corn were commonly traded utilising standard devices, launching trading on the Chicago Board of Trade (CBOT), the world’s first and longest existing futures and options exchange. Various food commodities were included into the Commodity Exchange Act and traded through CBOT in the 1930s and 1940s, increasing the list from grains to incorporate mill feeds, rice, eggs, butter, Irish potatoes and soybeans. Prosperous commodity markets demand vast consensus on product differentiations to enable every commodity to become legible for trading, for example, the purity of gold in bullion form. Civilisations in the classical era established complex global markets exchanging gold or silver for cloth, spices, weapons, and lumber, most of which had to pass certain quality standards and timeliness.
Throughout the 19th century, "the exchanges became effective spokesmen for, and innovators of, improvements in transportation, warehousing, and financing, which paved the way to expanded interstate and international trade."
Reputation and clearing became primary issues, and governments that managed them most efficiently became dominant financial hubs.
Commodities, in essence, are quite uncomplicated investment; if the supply is limited, prices tend to go up. The Commodity Research Bureau (CRB) index monitors the price of a basket of commodities, such as grain and metals although it is significantly weighted to energies.