What does the future hold for grocery costs? Here we need to monitor prices of ‘soft’ commodities: agricultural products, essentially.
Softs are among the world’s oldest traded products, though different exchanges classify soft commodities differently. They are traded in futures contracts, like all raw materials; farmers have traditionally used these contacts to lock in crop prices, while in recent decades investors expressing a view on price trends have been using them, too.
Owing to uncertainties such as weather, soft-commodity futures contracts can be volatile. Livestock, cotton, sugar, corn and wheat are classic examples of soft commodities; further examples include meat, livestock, cereals, grains, oilseeds, coffee, cocoa and orange juice.
