A commodity is a basic good or service, such as wheat, oil and freight, that can be easily exchanged with another of the same kind from around the world.
For example, a Saskatchewan grain farmer's revenue is closely tied to commodity prices — when global wheat prices drop from $7.00 to $5.50 per bushel, the farm's projected income for the season falls by nearly $200,000, directly affecting its ability to service its operating loan.
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