What does Soft Commodity mean?
Soft commodities are commodities that are grown or harvested rather than mined from the ground. They are also known as non-metal or non-energy set of commodities.
Futures Knowledge Explains Soft Commodity
For example, corn, wheat, sugar, coffee, cocoa, soybean, rice, vegetable oils, etc. would all fall in the category of soft commodities; often identified as agricultural commodities. Such commodities play a major role in futures markets. Producers of such crops would want to lock-in the future prices of these crops and thus, would enter into future commodity contracts with purchasers of such produce for further consumption or investors seeking returns from speculative transactions.