Glossary · Rates & Instruments
Commodities
Raw materials or primary goods traded on exchanges, including oil, gold, silver, cotton, and wheat. In Pakistan, commodity futures are traded on the Pakistan Mercantile Exchange (PMEX).
01—What is Commodities?
The definition — and what it means in practice.
Commodities are raw materials or primary goods that are bought and sold in standardised quantities, often through organised exchanges. Common examples include oil, gold, silver, cotton and wheat. Because a commodity is largely interchangeable regardless of producer, trading focuses on the grade, delivery terms and price. Investors usually access commodities through spot markets, futures contracts, or funds that track commodity prices.
Commodities matter because their prices can move for different reasons than shares and bonds, such as supply disruptions, weather, or shifts in global demand. That can make them useful for diversification and for understanding inflation-sensitive costs that affect company profits. For everyday investors, commodities also show up indirectly: many PSX-listed firms’ earnings are linked to input prices (fuel, metals) or product prices (cotton, wheat).
If gold rises from Rs 100 to Rs 110 per unit, that’s a commodity price move; you can be exposed directly via a contract, or indirectly via companies affected by gold prices.
- Commodities are standardised raw goods such as oil, gold, silver, cotton and wheat.
- Prices are driven by supply-and-demand factors, often different from drivers of equities.
- Exposure can be direct (spot/futures) or indirect (companies whose costs or revenues depend on commodities).
- Commodity markets can be volatile, especially when supply or logistics change suddenly.
02—How commodities works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), you do not buy “commodities” the way you buy listed shares; PSX is an equity exchange. A PSX investor typically encounters commodities through the effect they have on listed companies’ revenues and costs, and therefore on share prices and sector trends. Reading a company’s annual report can help you see how sensitive its business is to key inputs or output prices.
In Pakistan, commodity futures are traded on the Pakistan Mercantile Exchange (PMEX). Futures are a type of derivative, so the exposure and risk profile can differ from simply owning shares. Many retail investors keep commodities and PSX equities conceptually separate: shares settle on PSX under its own market process, while commodity futures are accessed via PMEX products and rules.
03—Common misconceptions
Where investors most often get this wrong.
Commodities on the PSX mean I can buy gold or oil like a share.
PSX is primarily for listed securities such as shares. In Pakistan, commodity futures are traded on PMEX, while PSX investors often get commodity exposure indirectly through listed companies.
All commodity prices move together, so one is enough for diversification.
Different commodities can behave very differently because each has its own supply chain, seasonality and demand drivers. Oil, wheat and gold may react to different events.
A commodity investment always protects against inflation.
Some commodities may rise when inflation is rising, but the relationship is not guaranteed. Prices can fall even during inflationary periods due to supply or demand changes.
04—Using commodities on BSL
Where this term shows up across the platform — with live data.
- Use the stock screener to find PSX sectors and companies whose earnings are sensitive to key commodity inputs.
- Track broad market moves on the market page and relate them to global commodity-driven themes affecting listed firms.
- Compare sector exposures using the sectors view to understand which industries may be more commodity-linked.
- Read related basics in the glossary to connect commodities with instruments like futures and derivatives.
05—Frequently asked questions
What investors ask about commodities on the PSX.
Frequently Asked Questions
Commodities are raw materials or primary goods such as oil, gold, silver, cotton and wheat. They are typically traded in standardised form on organised markets, and investors may gain exposure through spot trading, futures contracts, or funds linked to commodity prices.
Commodities are not typically traded on the PSX in the way listed shares are. PSX is an equity exchange, while in Pakistan commodity futures are traded on the Pakistan Mercantile Exchange (PMEX).
Commodity prices can affect company profits by changing input costs (such as fuel or metals) or the selling prices of outputs (such as agricultural products). That impact can flow into margins, cash flows and investor expectations, which can influence share prices.
A commodity is the underlying physical good (for example, wheat or gold). A futures contract is a derivative agreement whose value is linked to that commodity’s price, typically specifying standard terms such as quantity and timing.
Many commodities can be affected by sudden changes in supply, weather, transport and storage constraints, and shifts in global demand. Because these factors can move quickly, prices may swing more sharply than many other asset classes.
06—Related terms
Keep building the picture.
Pakistan's commodity futures exchange that trades in gold, silver, crude oil, and agricultural commodities. Several PSX brokers also hold PMEX membership.
An agreement to buy or sell an asset at a predetermined price on a specified future date. On the PSX, single-stock cash-settled futures are available on select listed securities.
A financial instrument whose value is derived from an underlying asset such as a stock, index, commodity, or currency. Common derivatives include futures and options.
The rate at which the general price level of goods and services rises over time, eroding purchasing power. High inflation typically squeezes corporate margins and can lead to interest rate hikes, which in turn affect equity valuations.
Spreading investments across different assets, sectors, or geographies to reduce the impact of any single position performing poorly.
The degree of price fluctuation in a security or market over a given period. High volatility means prices move sharply and unpredictably. Low volatility indicates steadier, more predictable movement.
Put the term to work
Open a free BSL trading account
Understand the market, then trade it — live PSX data, screening tools, and a research desk that speaks plain English.