A soft commodity, or softs, are commodities such as coffee, cocoa, sugar, corn, wheat, soybean, fruit and livestock. The term generally refers to commodities that are grown, rather than mined; the latter (such as oil, copper and gold) are known as hard commodities.
Soft commodities play a major part in the futures market. They are used by farmers wishing to lock-in the future prices of their crops, by commercial purchasers of the products, and by speculative investors seeking a profit. Sometimes the term soft is restricted to commodities which are identified as primarily tropical, such as coffee, cocoa, sugar, cotton, and orange juice.
Soft commodities have been known to adopt a backwardation trend until the late 1990s when futures were actively traded. Speculation and investment requirements later shaped the common contango trend.