Sunday 23 October 2011

Soft commodities


The commodities that are grown on the earth are known as soft commodities. In general soft commodities are agricultural products which are used as food stuff.

It is difficult to predict supply and demand of soft commodities as they may damage due to unexpected weather changes. So there will be a chance for huge volatility of prices in the short term.

As the most of the soft commodities are perishable over time, whether the prices or low or height those are to be dumped onto the market. If the prices reduced the investors will lose. On the other side, if invested at right time, they can get reasonable gains.

Soft commodities play a major part in the futures market. They are used both by farmers wishing to lock-in the future prices of their crops, and by speculative investors seeking a profit.

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