Soft commodities - what are they?.
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by: Guest
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Most CFD traders in Switzerland was for the most difficult materials, metals and oil issues, but many CFDs in the important area of \"Softs.
This sector generally refers to commodities that are grown instead of being mined, and this brief paper describes the background and factors that affect supply and demand.
The most important are soft as follows: sugar, this is a form of carbohydrates, of which the most commonly used version is the white crystal or sucrose, flavorings are used.
Sugar sucrose is extracted and refined from sugar cane, sugar beets, or sugar palm.
Most sugar cane is grown in countries with warmer climates, such as Brazil, India (part of), China, Australia, Fiji and Mexico.
It is noticeable that developing countries produced more sugar than developed countries.
Beet sugar rather in regions with cooler climates such as North West el Eastern Europe, to increase northern Japan, and in some areas of the United States.
In the northern hemisphere, the beet growing season ends with the start of harvesting around September, and harvesting and processing usually continues until March.
The availability of the capacity of processing plants and time are key influences on the duration of the harvest and processing.
It is possible to hold harvested beet until processed, but frost damaged beet cannot usually be processed.
The driving force behind the recent bull market has come from the effects of drier climate in the Brazilian market for sugar cane.
As with all grown commodities, though, the area planted to cane has been expanding at the expense of other crops such as coffee and oranges, a trend which is expected to continue.
L increased use of the other was for ethanol, but so far not been used much outside of Brazil.
Cocoa
This is the dried and partly fermented fatty seed of the cacao tree.
From him comes the chocolate and cocoa powder may be dusted.
Cocoa butter also derives from the dark, bitter cocoa solids.
The demand for the cocoa market is usually constant supply, but is often blocked by political considerations, given the many unstable areas, where it influences removed, especially West Africa.
Orange Juice
The main factors affecting the orange crop are the prevalence of freezing nights, so production has to be in tropical or warm temperate areas.
The main exporters of fresh organic citrus fruits in Europe are Italy, Spain and Greece, and elsewhere, Argentina, USA, Brazil, Israel, Costa Rica, Mexico and Cuba are major exporters.
The major organic citrus juice market is for orange juice, and there has been a rise in "Not from Concentrate" OJ as opposed to frozen canned OJ in recent years.
The most important determinants of the offer are climatic.
The later in the winter a freeze occurs, the less damage there is as early and mid-season varieties are already mostly picked off the trees and for instance in Spain, Valencia oranges are mature enough that many can be salvaged if processed immediately.
Cooler freezing, but temperatures can even be useful to the crop because it promotes good color.
Lumber
Lumber is wood that has been cut into boards or other shapes for the purpose of woodworking or construction, and it is supplied in rough form or finished.
Wood is the raw material for building furniture and other items, the additional cutting and shaping.
Finished lumber is supplied in standard sizes, mostly for the construction industry, and is primarily one of a few needle-bearing species such as pine, hemlock, fir or spruce.
The main market is dimensional lumber, that a term in the United States for timber, ready, or is planed and cut to use standard width and depth in cm spcified.
In Europe the sizing is slightly different.
Even if the timber is often a product of localized market, it is obvious that the demand is strong enough to stand the health of the global construction industry.
Cotton
This is the fibre that grows around the seeds of the cotton plant, and which results in a spun textile which is soft and highly breathable.
The major producers of cotton are China, India, USA, Pakistan, Brazil, Uzbekistan and Turkey.
The big question for longer term investors in cotton's bull market is simply how much China and lesser Far eastern producers can effectively become self-sufficient, and lessen the historic export demand from the US, where the market has traditionally been based.
Strong price gains have started to plant the decisions of farmers influence and promote a greater expansion of area under cotton in these countries.
The International Cotton Advisory Committee forecast that world plantings would rise about 3% in 2006-07 with much of the expansion to take place in mainland China and India.
By the widespread use of better seed varieties that are resistant disease, more than likely above average yields to continue to see, it takes an exceptionally bad weather in key growing areas, so this is a fascinating market to follow.
Coffee
Coffee is one of the world's major commodity crops and a major export of some countries.
The two main cultivated species of coffee plant are Coffea canephora (robusta) and Coffea arabica (Arabica), the second most suitable for drinking, since it is less bitter taste and.
Around three quarters of worldwide cultivation is Arabica, but robusta is less susceptible to disease than and can be cultivated in environments where arabica does not thrive.
Robusta coffee contains about 40-50% more caffeine than Arabica and is used as an economical substitute for arabica in many commercial coffee blends.
Most arabica coffee beans originate from Latin America, East Africa, Arabia, or Asia.
Robusta coffee beans are grown in West and Central Africa, Southeast Asia and Brazil.
The sugar market came to life in 2005, and coffee followed shortly afterwards, with growing demand not matched by increase in supply, as many developing nations become more affluent and increase their coffee consumption.
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