Commodity Price Index

By: EconomyWatch   Date: 14 October 2010

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Commodity Price Index gives the weighted mean of the price of a selected commodity, which means any physical object such as food, grain that is interchangeable with other goods of same type, and it's a fixed weighed index. The Economist's commodity price index is regarded as the oldest regularly published price index around the globe.
Categorization of the elements in a Commodity Price Index:
  • Energy.
  • Metals: Metals are of two types:

    • Base Metal
    • Precious Metal.

  • Agriculture: Under this category, two things will fall, such as,grains and livestock.


Different Indexes:
  • Dow Jones-AIG Commodity Index: It tells about the future contracts of the physical commodities. This index allows the investors to track commodity futures by offering a simple way of measurement.

  • Goldman Sachs Commodity Index : Goldman Sachs Commodity Index is a grouped index of commodities that returns and represents an unweighed investment. It is a trading index and used to measure the commodity performance over a particular time frame.

  • Roger International Commodity Index: Roger International Commodity Index is a kind of commodity index which gives the value of a collection of commodities from 10 exchanges that are used in the economic world. The number of commodities used for the collection is constant and that is 36.

  • Standard & Poor's Commodity Index: This index gives the measurement of the change of price in a portion of the agricultural and industrial commodities. It covers several sectors like energy, metal, grain, livestock etc. Natural gases, heating oils, crude oils, wheat and etc s are some of the components of this index.

  • The NCDEX Commodity Index : It is the first India based index that gives the price of immediate settlement of 20 agricultural commodities. The NCDEX Commodity Index also highlights on the national index features.

Usefulness of Commodity Price Index:
  • A commodity price index can be used to examine the foresighted usefulness of the commodity prices.

  • It represents the class of a wide range of commodity asset or a specific subset of commodities, such as energy or metals.


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