Soft Commodity
Soft commodities are commodities such as coffee, cocoa, sugar, corn, wheat, soybean, fruit, and livestock. They represent some of the oldest types of futures known to have been actively traded. Soft commodities generally refer to futures contracts where the actuals are grown rather than extracted or mined. The price of soft commodities tends to be driven by the price of the oil business cycle and weather. They are sometimes referred to as tropical commodities or food and fiber commodities.
Soft commodities are more volatile as their price-setting mechanism relies on multiple external factors.
Necessary for daily sustenance, their availability and lack thereof, offer an opportunity for traders and investors to speculate about their future.
Soft commodities are traded in various ways on many exchanges.