Softs Futures


Softs futures refer to commodities other than the major agricultural and financial products—grains (corn, wheat, and so on), meats, metals, and oil—traded as futures on exchanges such as the CME. Softs are items of commerce that range from cotton and wool to coffee, sugar, cocoa, orange juice, and other foodstuffs.

More About Softs Futures

Continue reading to learn more about:

Commodity
Commodity futures
Soft and hard commodities
Investing in soft commodities
Soft futures


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Commodity


A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities have been traded and been used as the medium of exchange since pre-history. The history and evolution of commodities can be traced back to ancient times and then developed into formalized exchanges which fostered trading across regions and civilizations, hard assets such as rare or precious metals evolved as IOUs or store-of-value to offset balances on credit. Today commodities are essential part of world economy.


 
 

Commodity futures


Commodity futures is the term used for contracts concerning a particular physical commodity traded on a futures exchange. If you have ever heard about "farmers selling crops" or "oil companies buying oil" as a part of the stock market, then you are familiar with commodities. Since these trades involve tangible goods and involve shipping, they are more similar to other types of transactions that take place in commodities exchanges rather than the stock market.

 

Soft and hard commodities


There are two different types of commodities traded on the futures market, hard and soft.

1.) Hard commodities include all raw materials that come from a natural source such as: grains, metals, energy and livestock. Usually these commodities require large operations and investments to be able to produce them, which makes them relatively steady in terms of supply and demand.

2.) Soft commodities however are usually crops (out of season) or certain consumer goods like coffee(Arabica or Robusta) or cotton that can be grown by small farming operations and usually have a greater supply than demand.
 
  • Investing in soft commodities

    The Softs Exchange is designed to bring together unknown buyers and sellers of soft commodities into a physical, transparent marketplace providing liquidity. It is based in Singapore, the birthplace of hedge trading and futures exchanges, with access to all key Asian markets. The Softs Exchange provides a neutral space for producers and purchasers of soft commodities to trade such as oilseeds, grains, yellow grease and fibers.
  • Soft futures

    Softs are commodities such as coffee, cocoa, orange juice and sugar that you have probably experienced buying in their raw state. However, in futures markets, softs are an average price for the commodity throughout a given month. In that sense, it's similar to what your neighbor would pay for oranges at the market and represents the futures price for an entire commodity.