A strategic commodity is a commodity that is considered to be of utmost importance to the economy of a nation, usually to the extent that if the open trading of the commodity is disrupted in some manner the economy will suffer severely. Commodities in general are understood to be raw materials or agricultural products that can be bought and sold as investments as well as for ongoing consumption. Commodities of this type are often widely used and the active trading of these products may underpin the economy of a nation. Should a commodity that does in fact contribute a great deal to the economic stability of a nation suddenly be unavailable, the results can be far reaching.
Determining what constitutes a strategic commodity is not always easy. While there is some general agreement on some commodities having the status of strategic, such as oil, corn, and gold, there may be debate about other products such as fertilizers used to grow the corn, or other alloys that are sometimes used in conjunction with gold. It is also important to note that while some products may be very important to the economy of one nation, they may have minimal impact on the economy in a different nation.
The identification of any strategic commodity within a certain setting rests on just how crucial the open trading of that commodity is to the well being of the economy. If the supply of that commodity was suddenly curtailed severely, this could benefit a few, but overall could have disastrous results for the majority of consumers who depend on products made using that commodity. At the same time, a sudden glut of that same commodity into the marketplace may result in lower prices for related goods, something that consumers would enjoy but would not necessarily be welcomed by investors who would see their profit per unit reduced significantly.
Many nations monitor a list of strategic commodity products that are traded within their borders. The monitoring involves not only being aware of what is happening with those commodities now but also what is likely to happen in terms of availability in the future. For example, if the strategic commodity of corn is currently being traded at equitable levels but there is a good chance that the supply in an upcoming period will be decreased due to adverse weather or the occurrence of a natural disaster, governments can begin taking steps now to help minimize the impact of that decrease. Doing so would help to minimize the impact of the decrease on the economy, hopefully long enough for a substantial supply of the strategic commodity to be replenished at a later date.