As the volume of domestic and international commerce becomes more complex when combined with the increasing variety of goods and services traded, a standardised coding system for specifying orders becomes necessary to ensure that the correct products are delivered.
In the broadest sense, a commodity is anything that may be bought and sold in a given market. The term is used differently from "good" or "service" primarily to describe any raw or partially processed natural resource used in the manufacture of a finished product or in the delivery of a specific service. In this sense, commodities include crude oil, precious metals and agricultural products (e.g., beef, grains). Component parts, such as computer processing chips, catalytic converters and ball bearings are also considered commodities.
Commodity codes are five-figure numbers subdivided into two parts. The general category is represented by the first three digits, and the exact item is represented by the remaining two. Though recognised internationally for commercial and financial purposes, the standard for commodity codes, called the Standard Classification of Transported Goods, is set by the U.S. Department of Commerce.
Commodity codes reflect a broad category combined with a narrow subset. Wheat flour, for instance, is assigned the commodity code 06100. The broad commodity category "milled grains" is indicated by "061," and wheat flour is specifically designated by "00." Another example would be poultry in a chilled or fresh state, 05121. In this instance, "051" stands for the category for meat, poultry and fish. The suffix "21" refers specifically to fresh or chilled poultry.