Commodity risk

Hey kiddo! Have you ever gone to the grocery store with your mom or dad? Do you remember how some things cost more than others?

Well, there are some things that are bought and sold in large quantities, like food or oil, and these are called "commodities." Farmers and companies produce these things, and they sell them to people who want to use them for different things.

But, there's a problem. The cost of making and selling these things can change a lot depending on different things that happen in the world. For example, if there's a big drought, it might be harder for farmers to grow crops, and the price of food might go up. Or, if there's a lot of oil being produced, the price might go down because there's too much of it.

This is called "commodity risk." When you buy or sell large amounts of these things, you might lose or make money depending on how the price changes. And that's why people who buy and sell commodities have to be really careful and pay attention to what's going on in the world.