Derivative contracts: accounting conditions: meaning of commodity
What is a commodity?
‘Commodity’ is not defined in Part 7 CTA09, or elsewhere in the Taxes Acts. You should give the term its normal English meaning.
It will usually be clear whether the underlying subject matter of a particular contract is a commodity. Futures (and sometimes options) over agricultural products, such as wheat, soya beans, orange juice, coffee, broiler chickens and so on; metals, such as gold, silver, platinum or zinc; and oil products and other fuels, such as crude oil, kerosene, natural gas or propane, are all traded on recognised futures exchanges. All such products are regarded as commodities for the purposes of the legislation.
However, even though the futures contracts traded on an exchange specify a particular quality, purity or variety of a substance, the definition of commodity is not restricted accordingly. For example, if a silver futures contract specifies that the silver must be in bars of 1,000 troy ounce weight and 999 fineness, it does not mean that silver in smaller bars and of a lesser degree of purity is not a commodity.
A commodity does not have to be tangible or storable - for example, electricity is a commodity.