Soft Commodity
Categories: Trading
Soft commodities aren’t teddy bears and feather boas. Rather, they're commodities that are grown...organic stuff. Think: cotton, wheat, rice, coffee, corn, sugar...even cows. Mooooove on over, extracted commodities.
Since soft commodities depend on a lot of external factors, like pathogens and rain and yields that year, there’s a lot of uncertainty that comes with them. Which is why it’s no surprise that soft commodities have a cushy spot in the futures market, where farmers can lock in prices for their goods.
Likewise, speculators can try their hand at making a profit via speculating on climate conditions and other environmental factors for that year. The uncertainty that comes with soft commodities means they’re not for softie investors.
