Soybean Futures

Market

Soybean futures are one of the most widely-traded commodities futures products in the world. The United States, Brazil, Argentina and Paraguay are the biggest producers and exporters of soybeans in the world. China is the biggest importer of soybeans, with 60 percent of total imports, followed by the European Union, Mexico, Japan and Taiwan.

History

Soybeans originated and were first cultivated in China. Soybeans arrived in America in the early 1800s, but it wasn't until the 1940s that soybean farming took off in the United States. Soybean fields in China, the major supplier of the world at that time, were destroyed by World War II - which U.S. farmers took as an opportunity to produce the commodity.

Facts

  • Regarded as the second largest revenue-generating crop for the U.S., soybeans are a multipurpose crop.
  • Once harvested, soybeans are either crushed into soymeal, which is used for feed, or soybean oil.
  • Soybean oil is used for food oils, paint, plastics, and bio-diesel production.
  • American livestock - chickens, cattle, turkey, and pigs - consume about 25 million tons of soybean meal each year.
  • No other high protein animal feed comes close. This boom in the use of soybean meal for livestock feed began in the 1950's and has not slowed down since.

Trading

Soybean futures began trading in 1940, while soybean oil futures got started in 1950. soybean futures are traded in an open outcry format and electronically through the CME Group , the Brazilian Mercantile and Futures Exchange (BM&F), Mercado a Termino de Buenos Aires (MATba), Dalian Commodity Exchange (DCE), Kansai Commodities Exchange (KANEX), National Commodity and Derivatives Exchange (NCDEX) and the Tokyo Grain Exchange (TGE).

The market currently trades electronically around the clock except for a three-hour break between 3 p.m. and 6 p.m. Open outcry trading on the CME floor occurs between 8:30 a.m. and 1:15 p.m. CST.

Investors typically watch several reports for cues to trade soybean futures, including the following:

  • USDA World Agricultural Supply and Demand Estimates Report
  • USDA Crop Production
  • USDA Grain Stocks
  • USDA Acreage

One of the most controversial influences in the soybean futures market is the concept of genetic modification, in which soybeans were modified to be resistant to herbicides by introducing genes taken from bacteria. Within a 10-year range from 1997-2007, the population of GMO soybeans increased from about 8 percent to 89 percent. GMO soybeans are now widely, if tentatively, accepted.

 

Contract Specifications 

Contract SymbolContract UnitPrice Quotation
ZS5,000 bushelscents per bushel
Trading ExchangeTrading HoursTick Value
CME GLOBEX8:30 - 13:20,
19:00 - 7:45
1 cent = $50

 

 

Fundamentals of Trading Agricultural Futures

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.