The World of Soybean Futures, A Growing Commodity Market
As a member of the key grain complex, soybean futures are a very closely watched commodity on the Chicago Board of Trade (CBOT) and CME Globex trading platform.
As well as the soybean itself, it is also possible to trade soybean oil futures and soybean meal futures on the above exchange.
The average daily volume of soybean futures contracts on CBOT has grown considerably since 2000.
For example in April 2000, there were 55,000 soybean contracts which had grown to about 170,000 by April 2008.
Soybean oil and soybean meal both show an approximate doubling from about 23,000 in April 2000 to around 55,000 in the average daily contracts volume.
You can now subscribe to the free Commodity Universe Ezine below, and get the latest articles on the commodity sector . Just your first name and email. It's as easy as 1-2-3! With the world economy moving into a phase of significantly higher food prices, the planting patterns of US as well as Brazilian, Australian and Argentine farmers will be keenly watched, these being the top four world producers of soybean. The US Department of Agriculture projects that US farmers will plant more soybean and wheat in 2008 and correspondingly less cotton and corn.
Demand for vegetable oil and meal has increased and so planting decisions change to meet this growing need.
With the Head of the World Bank and the World Food Programme expressing concern about millions of people at risk from malnutrition, the debate about the excessive futures prices of grains will not go away.
Soybean is used in a growing range of applications, from soy plastics, foams and printer ink to healthy foods, where soyprotein is claimed to help in the fight against coronary heart disease.
New technologies such as Genetic Modification (GM foods) have been trialled and roled out with grains such as soybeans.
There is also the use of soybean oil along with corn in biodiesel and its attractions include being a substitute for Middle Eastern oil imports as well as an environmentally cleaner fuel which also helps engine preformance.
Trading soybean, soybean oil and soybean meal futures
The price of soybean futures will be affected by a number of factors which themselves impact on the demand and supply balance of this grain, as it does for other agricultural commodities like corn and wheat.
We need to look at crop sizes, crop conditions, unusual weather patterns, the levels of shortfalls or surpluses, agricultural and economic policies of governments and regions, such as the EU, relative dollar strength and overall world demand.
Soybean futures contracts on CBOT and CME are for 5,000 bushels, while the mini version is for 1,000 bushels.
Tick sizes are 0.25 cents per bushel ($12.50 per contract) and 0.125 cents per bushel ($1.25/contract) for the mini soybean contract.
Trading symbols are S (YK for mini) on the open outcry system and ZS (XB mini) for the CME Globex electronic trading platform.
Contract months are September, November, January, March, May, July and August.
Margin requirements for soybean futures are $4,725 for the initial ($945 for the mini) and $3,500 for maintenance margin ($700 for the mini version).
Tick size is $0.0001 per lb ($6/contract). Trading months for this product are October, December, January, March, May, July, August and September.
Ticker symbols are BO (open) and ZL (electronic). The initial margin requirements are $2,295 while to maintain your trading account requires at least $2,000.
Trading months are as for the soybean oil contracts and minimum margin levels are $2,025 (initial) and $1,500 (maintenance).
The last day of trading is the same as for wheat futures and corn futures as are the times of trading on both open outcry and electronic platforms.
Looking to the future it seems soybean futures will be play a significant role in reflecting the growing demand for food in the world as well the need for innovative ways of supplying biofuels and developing the GM product range.
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