What influences the price of soybeans?

Naturally, supply and demand are the most important determinates of sugar’s price, but what influences the supply and demand of sugar? Demand for sugar around the world from consumers has been dropping as health concerns cause consumers to look for alternatives to sugar. Offsetting that has seen an increased demand for biofuels, with some countries using sugar cane as the raw material for ethanol production. This demand can also be influenced by the price of oil. When oil prices drop, it is no longer competitive to produce ethanol using sugar cane, and the price of sugar is likely to fall. Of course, weather can also impact sugar prices, especially in Brazil and India, where roughly half the world’s sugar cane crops are grown.

Should I trade soybeans?

Soybeans are considered to be a good hedge against a weak U.S. dollar and rising inflation. With both expected over the coming months and years in response to the huge U.S. deficits, a focus on soybean trading could be a way to diversify and. Plus, the growing global population and increasing interest in a plant-based diet promise a trend in growing soybean demand. Soybeans are also used in the production of biodiesel fuels, and the increasing move towards green energy will help foster demand for soybeans as well.

What is the best soybeans trading strategy?

Soybeans are usually traded as futures contracts or as options where traders take advantage of the "crush spreads" – the difference between the prices of soybeans and its two main products – soybean oil and soybean meal. To take direct advantage of changes in soybean prices, the best strategy could be to trade CFDs. These are a pure play on the price of soybeans and tend to come with far lower fees than futures. CFDs allow a trader to easily go long or short based on whether they feel the price of soybeans will rise or fall.

Soybean Trading | Soybean CFD Market

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Soy trading via CFDs

The soybean was first introduced in Europe in the 1700s and has since made a mark for itself globally by serving as an oil and protein source worldwide. America produces 55% of the world’s soybeans while they export 37%. Soybean has since become a staple food for many countries.

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Soybean trading market

Most soybean produced is used for the extraction of the oil, which is then used primarily for culinary purposes. The soybean meal that is left over after the oil has been extracted is used for agricultural feed for livestock.

Exchanges that deal in Soybean trading both in an open outcry format and electronically are the CME Group (Chicago Mercantile Exchange (CME), e-CBOT), National Commodity and Derivatives Exchange (NCDEX), Mercado a Termino de Buenos Aires (MATba), Dalian Commodity Exchange (DCE), the Brazilian Mercantile and Futures Exchange (BM&F), Kansai Commodities Exchange (KANEX), and the Tokyo Grain Exchange (TGE). Whole soybean CFDs are also a tradeable instruments at Friedberg Direct.

Contract Specifications:

Soybean trading hours: 01:00-13:44 and 14:30-19:14 (GMT)
Minimum trade size: 1
Contract size: Bushels (100)
Ticker symbols: Open Outcry S (CBOT) Electronic: ZIS (eCBOT)
MT4 symbol: SOYBEAN
Price Quote: cents per bushel
Tick size: 0.25 cents per bushel

Trading the soybean market can be extremely volatile; yet it can be one of the most liquid in the commodity futures market, followed by corn and natural gas.

The soybean produces two main byproducts: soybean oil and soybean meal, where both have their own supply and demand prices that impact futures prices.

When trading soy, many traders employ a strategy known as crush spread to counter this issue, whereby they purchase one contract of soybean meal and sell one contract of soybean oil, thereby, reducing market exposure and hedging their investment.

When trading this commodity, traders are advised to keep their eye on the soybean daily price trading charts, for sudden market changes and to monitor future trends.

Price influences

As a soft commodity there are several factors that influence the price of the soybean. Annual yields of most agricultural crops like grains or sugar rely on the weather. Poor weather conditions before harvest will result in a decrease in supply, thus setting the price of soy higher. Another agricultural hazard is soybean rust, a fungal disease that of late has lowered crop produce.

Main producers of soy products are the USA, Brazil, Argentina, China and India. These countries make up 90% of global production. The US is noted to be the leading producer, with an output of 108 million metric tons, followed by Brazil at 86.8 million. Argentina comes in third with 53.4 million. The top importers are China accounting for over 41% of imports, and Europe’s import figure at 22%.

Owing to a general increase in demand for soy products, due to increased population growth, economic development etc., most soy consumption (75%) is as animal feed. On the other hand, the highest commercial interest is the oil and protein produced from soy.

The composition varies due to climate and location as well as how the product is farmed. Asia currently is the largest consumer of soy consumer products as they replace meat and milk with soybeans, in the form of tofu and soy milk.

Soybean trading tip

As this commodity is highly volatile it is most recommended that traders be alert to weather conditions and other external factors per country that directly have an impact on the crop production.

These influences are peripheral and cannot be controlled, but will impact the price of soybeans. Technical indicators such as the moving averages or MACD are recommended to gain clarity on each market trend.

Demand will often depend on the lack of other crops or substitute products. For example, if meat product prices decrease, there may be less demand for soy products; if grains are more available for livestock then soy in this respect may also have a decrease in the demand for the products.

Soybeans Trading FAQs

What influences the price of soybeans?
Since it is an agricultural commodity, the weather has a huge impact on the price of soybeans, particularly during the planting season. We’ve also seen a significant uptick in demand as consumers in Europe and the U.S. switch to a more plant-based diet. This could have a long-term impact on the price of soybeans, which are an excellent plant-based protein source. Soybeans are also impacted by corn supply and demand since farmers often switch their fields from one to the other depending on the pricing of each. Farmers look to generate the best profits and will plant more soybeans if prices are high, but this can lead to lower soybeans prices later in the season as supplies rise dramatically.
Should I trade soybeans?
Soybeans are considered to be a good hedge against a weak U.S. dollar and rising inflation. With both expected over the coming months and years in response to the huge U.S. deficits, a focus on soybean trading could be a way to diversify and. Plus, the growing global population and increasing interest in a plant-based diet promise a trend in growing soybean demand. Soybeans are also used in the production of biodiesel fuels, and the increasing move towards green energy will help foster demand for soybeans as well.
What is the best soybeans trading strategy?
Soybeans are usually traded as futures contracts or as options where traders take advantage of the “crush spreads” – the difference between the prices of soybeans and its two main products – soybean oil and soybean meal. To take direct advantage of changes in soybean prices, the best strategy could be to trade CFDs. These are a pure play on the price of soybeans and tend to come with far lower fees than futures. CFDs allow a trader to easily go long or short based on whether they feel the price of soybeans will rise or fall.

These FAQs, comments/analysis do not take into consideration your individual personal circumstances and trading objectives. Therefore, they should not be considered as a personal recommendation or investment advice. They are intended for educational purposes only. Past performance is not indicative of future results. There is no guarantee that the contents or instructions will result in profits or not result in losses.