During the past decade, institutional investors have sought to diversify their portfolios by investing in nontraditional assets such as foreign securities, real estate and venture capital. More recently, some institutions have considered commodities as a potential investment. Historically, commodities have had a negative correlation with traditional asset classes and have offered an effective hedge against inflation. This column reviews the market and describes the sources of value for nonfinancial commodity futures contracts. These contracts fall into four broad categories — grains and oil seeds, livestock and meat, food and fiber, and metals and petroleum.