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Commodities are items of value that are traded, bought and sold the world over.  By definition commodities are items which have uniform quality, value, and are the same in essence no matter where produced.  There exist hard commodities, those which are mined, and soft commodities, those which are grown. Hard commodities include:

Coal

Just to name a few, the list goes on.  For soft commodities, those which are not extracted from the earth or mine, rather grown, the list is even longer.  Soft commodities used in trading commodities are:

Live Cattle

Live Pigs

Corn

Commodities are traded on their own markets to facilitate the trading of commodities, make the process more efficient, and maintain the supply and demand prices more accurate.  The commodities markets include, but are not limited to:

The New York Mercantile Market

Chicago Board of Trade

Kansas City Board of Trade

Chicago Mercantile Exchange

Commodity Futures Trading Commission

London International Financial Futures and Options Exchange

National Futures Association

New York Board of Trade

More commodities markets exist all over the world.  Each market trading in commodities operates in the same manner in order to maintain both pricing and goods flow accurately.

Investing In Commodities

Investing in commodities is not for the faint of heart.  The commodities market is notoriously volatile and money is both made and lost in rapid succession.  The problems most investors face investing in commodities are commodities futures contracts.  With commodities futures contracts one is buying and essentially betting against future prices.  A futures contract on bananas for example can be bought before they are even near ready to harvest, a year in advance.  The futures contract commodities buyer is investing in commodities by betting that they can nail down the price of bananas for next year by buying them for a set price from the farmer now.  If for instance a hurricane wipes out the major banana fields of Central America the same year and the price of bananas shoots through the roof, the investor trading commodities wins.  They have bought cheap bananas in advance, and now can sell them for more.  On the other hand, if there is a good harvest year and the banana crop price falls; the commodities trader has just bought some very expensive bananas, a potentially big loss

A better option for investors in commodities to buy into them without too much exposure are Exchange Traded Funds (EFTs) trading in commodities from gold to wheat.  These funds are similar to mutual funds and protect against single commodity loss by spreading the investment over many.