Soft commodities, or agricultural commodities, are primarily derived from agricultural products or natural resources. They include products such as wheat, corn, soybeans, sugar, coffee, cocoa, cotton and other crops.
On the other hand, hard commodities are non-agricultural commodities that are extracted from the earth or natural resources. They include precious metals like gold, silver and platinum, industrial metals like copper, aluminium and nickel, energy commodities like crude oil, natural gas and minerals like iron ore and coal.
The main difference between soft and hard commodities is their origin and production process. Soft commodities are typically cultivated or farmed, involving agricultural practices, while hard commodities are extracted from the earth through mining, drilling or extraction processes.
Soft commodities are influenced by weather patterns, disease outbreaks, harvest yields and global supply and demand dynamics. They are also susceptible to geopolitical events, trade policies and government regulations related to agriculture. In contrast, hard commodities are influenced by factors such as global economic conditions, supply and demand dynamics, geopolitical tensions and technological advancements.
