Soft commodities have a deep presence in our every daily lives. Consisting of Cocoa, Coffee, Cotton, and Sugar, these hard assets appear in everything from the clothes you wear, to your morning caffeine rush to help get you through the day. The majority of softs are produced in emerging markets, which makes for enticing but risky price drivers. As such, it is not hard to see why these investments have appealed to the more active side of the market.
Soft commodities are some of the most popular trading instruments in the commodity world. Known for their often volatile daily movements, these four commodities have become widely used for a number of purposes like speculative bets on Brazil's sugar production for the year. These assets can also serve as an effective hedge against inflation, since their values are often among the first to rise when prices begin to climb.
There are a number of ways to invest in soft commodities, including ETFs, single stocks, and futures and options.