Commodities are another tradeable asset, like stocks, bonds, or options.

In physical form, they are goods, usually raw and unprocessed, that come from the earth, which are used to make things that we use or consume every day.

Commodities come in several different forms.  Soft commodities include sugar and coffee.  Grains, come in the form of rice, wheat and soybeans.  Hard commodities, or "metals" like gold and and silver, are mined or extracted.  And energy commodities, like crude oil, natural gas, and electricity are the most actively around the world.  Other commodity examples include live cattle, lumber/wood and dairy products.

Commodities are things of value and are usually produced in large quantities by many different producers around the world, but at about the same level of quality.

For example, crude oil or cattle, for the most part, aren't that different if bought from producer A versus producer B.  Buyers almost always look for the lowest price when making our buying decision because the commodity is nearly the same regardless of from whom or where it's bought.  It's this "undifferentiability" that makes a commodity a commodity.  Gold is gold.  It's impossible to know who mined it.

Read a more in-depth explanation of commodities here.