History of Commodity Market

The commodity markets as we know them today started with trade in agricultural products. Cattle, pigs, corn, and wheat were widely traded through standard instruments in the U.S. in the 19^th century while other foodstuffs like soybeans were only recently added to the commodities markets. There are commodity markets in all corners of the world. For a market to be established, the industry players must reach a broad consensus on the items that will be traded.

Going back several thousand years, commodity market trade can be traced back to early civilizations. Ancient civilizations exchanged goats and sheep while other peoples exchanged rare seashells, pigs, and other items. Ancient civilizations sought, and found ways to make trade in these commodities predictable and smooth. In ancient time, small baked clay tokens that took the shape of goats or sheep were used as commodity money. Clay vessels were used to hold these tokens. The tokens were numbered and they represented promises to deliver the numbers. The tokens also contained promises on date and day of delivery (like present-day futures contracts). The vessels were sealed and there was no way of verifying the number of tokens in each vessel (without breaking the vessel or shaking it). This is the oldest known method of commodity accounting.

In classical civilizations, commodity markets were mostly based on the trade in silver, gold, spices, wood, cloth, and even weapons. These markets included standards of timeliness and quality.