Soft commodity 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. Soft commodity Soft commodities, 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
Commodity index fund Commodity index fund A commodity index fund is a fund whose assets are invested in financial instruments based on or linked to a commodity price index. In just about every case the index is in fact a commodity futures index. You cannot invest in an index, but you can invest in a fund. A Commodity Index Fund is a fund which either buys and sells futures to replicate the performance of the index, or sometimes enters into swaps with investment banks who themselves then trade the futures. The biggest and best known such fund is the Pimco Real Return Strategy