How is a commodity defined according to the Commodity Exchange Act?

A commodity is defined according to the Commodity Exchange Act as a basic good used in commerce. This definition encompasses a wide range of goods that are typically produced and traded in bulk, such as agricultural products (like corn, wheat, and soybeans), metals (like gold and silver), and energy resources (like oil and natural gas). The key aspect of this definition is that commodities are interchangeable and standardized products, meaning they can be bought and sold on the market without concern for variations between individual units.

By framing commodities in this way, the Act facilitates transparent and efficient trading practices in the commodities markets, allowing for the establishment of prices based on supply and demand dynamics. This classification is critical for regulatory purposes, enabling the creation of futures contracts and trading systems that enhance market stability and liquidity.

The other answer choices don't fit within the established definition: a service that cannot be standardized would not hold a physical form and cannot be traded like commodities; a financial instrument typically refers to stocks or bonds, which are not physical goods; and a local product exclusive to a region does not represent the broader notion of commodities that can be traded across markets.