Commodity exchange

Commodity exchange, formal market in which participants buy and sell contracts providing for the delivery of certain products at future dates. The world's major commodity exchanges are in New York, Chicago, and London. Prices set in these markets largely determine prices in other parts of the world. Commodities (metals, crops, livestock, etc.) tend to fluctuate in value depending on availability. Since contracts calling for future delivery set the price in advance, commodity exchanges allow for speculation in a rising market and hedging in a falling market.