James Earnest Investments

A basic good used in commerce that is interchangeable with other commodities of the same type (grains, gold, beef, natural gas and oil are examples). Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as basis grade.

The basic idea is that there is little differentiation between a commodity coming from one producer and the same commodity from another producer - a barrel of oil is basically the same product, regardless of the producer. Compare this to, say, electronics where the quality and features of a given product will be completely different, depending on the producer......Investopedia