A fungible commodity is a commodity that is currently, or may in the future become, an underlying of recurrent/ tradable contracts in the spot markets, forward markets or derivatives markets. The units of a fungible commodity are interchangeably or easily replaceable in the market. Fungibility of a commodity depends on several factors including availability in a specific grade or condition (specifications), location (in a very close vicinity), cost/ price, etc.

Examples of fungible commodities include:

• Energy products: oil, gas, electricity, etc. For instance, oil, in its different grades and origins, is interchangeable.
• Refined products.
• Gold.
• Silver.
• Copper.
• Wheat.
• Cotton.