Soybean Trading

Soybeans are one of the most popular oilseed products in the world and have a wide range of uses, from food and feed to industrial materials. Trading soybeans on a global scale is seen as a profitable endeavor as soybean products are especially appreciated in Asia and among global natural-food enthusiasts. Many publications are now printed with soy ink, which is becoming an increasingly popular alternative to petroleum-based inks.

Investing in soybeans makes sense to many traders as soybeans are increasingly being seen as a renewable resource with many industrial applications as well. Diesel fuel with a soybean foundation is a new energy source that's capturing the attention of the trucking and construction industry. At some point trading soybeans may take on some features that are similar to energy futures trading. Soybeans are also being used successfully in cleaning products, adhesives, polyesters, and other textiles.

Two soybean futures contracts are traded at the Chicago Board of Trade. The main contract is for 5,000 bushels (about 136 metric tons) and a mini-sized soybean futures contract is 1,000 bushels (about 27 metric tons). The pricing unit is dollars and cents per bushel with a minimum price fluctuation of ¼ cent ($0.0025) per bushel or $12.50 per contract. The daily trading limit for soybean futures is 70 cents per bushel ($2,500).

Trading months for soybean futures are January, March, May, July, August, September, and November. Electronic trading of soybean futures takes place between 6 p.m. and 6 a.m. Sunday through Friday and side by side with open-outcry trading from 9:30 a.m. to 1:15 p.m. Monday through Friday.

There are several other options for trading soybeans:

• Options on CBOT soybean futures

• The CBOT South American soybean futures contract

Watch how the seasonal pattern develops for soybean futures. Typically, soybean prices come under pressure before and during the U.S. harvest season in September-October when an increase in supply is anticipated or realized. But the winter is also the largest demand period for soybean meal in livestock feed so soybean crushers and soybean exporters begin to bid up prices in late fall or early winter before all of the soybeans get locked up in farm bins. Then after the first of the year soybean and grain prices sometimes endure a “February break” as the rivers freeze up and barge transportation is limited and as farmers deliver the crop they had been holding for tax or other reasons. In the past the attention then began to focus on new-crop soybeans and the uncertainty about planted acres and summer growing conditions, causing soybean prices to rise into summer as soybean supplies diminished. However, the rise in South American soybean production and exportable soybean supplies in March-April has modified the seasonal pattern. The price structure of soybean futures contracts usually includes a carry charge to cover the cost of interest, insurance, etc. – that is, the price of March soybean futures should be, perhaps, 10-12 cents higher than for January soybean futures for that reason alone. But if the prices for front-month soybean futures are above prices for the more distant contract months, the market is saying it wants the soybeans now and is evidence of demand. Traders should be alert to these price influences on soybeans and should be using a technical indicator like moving averages to get a clearer picture of the market trend.

Soybean Trading Video News

Soybeans originated in China but over the centuries have been cultivated in many temperate areas around the globe. For many years the United States was the world’s major soybean producer and exporter, but in recent years soybean production has increased dramatically in Brazil and Argentina. Although the United States still exports more than a billion bushels of soybeans in a year, the U.S. share of total world soybean exports has decreased as South American soybean production and trading has expanded. China has been a major soybean producer and exporter in the past, but with its large population and domestic demand, China has become a major soybean importer and its soybean purchases – or lack of them – have become a significant factor for soybean prices.

According to the Smithsonian, Henry Ford even promoted soybeans, helping to develop uses for it in both food and in industrial products, even demonstrating auto body panels made of soy-based plastics. Henry Ford's interests in soybeans led to 2 bushels of soybeans being utilized in each Ford car.