A futures contract in which the underlying is a commodity, primarily an agricultural product (coffee beans, wheat, corn, etc), metal (silver, gold, platinum, etc), or natural resource (oil, gas, etc). The first type of commodity futures is known as soft commodity futures, while the other is known as hard commodity futures.
These futures are contracts to buy or sell a specific amount of the underlying commodity at a predetermined price or a preset date in the future. These contracts are used by buyers to mitigate the risks resulting from price fluctuations up to the date of actual purchase of the commodity.
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