Commodities are the natural resources that shape our global economy because they are required on a permanent basis to generate its most basic components. Soft commodities, referred to as “Softs”, are generally agricultural in nature (like sugar and corn). Hard commodities, on the other hand, referred to as “Hards”, are energies or metals (such as natural gas or gold).
The commodity markets are influenced by a number of factors, including supply and demand, economic and political events and, of course, the weather. The U.S. dollar also plays a role as that is the currency commodities are generally listed in. Consequently, commodity prices can often fluctuate significantly.