Soybean futures (ZS) allow market participants the opportunity to profit from or hedge against the price movements of a leading oilseed product with a variety of dietary and industrial uses.
The majority of the soybean yield is used to produce vegetable oil and animal feed, though beans are increasingly seen as a renewable resource with industrial applications.
Production in North and South America currently satisfies more than half of the global soybean demand, with the U.S. leading in exports and Brazil closely following with its continual efforts to expand its production capabilities.
Each CME Group futures contract represents 5,000 bushels of soybeans with a minimum price fluctuation of ¼ of one cent per bushel, or $12.50 per contract. The contract trades Sunday-Friday from 7 p.m. to 7:45 a.m. Central Time (CT) and Monday-Friday from 8:30 a.m. to1:20 p.m. CT.
As is the case with most U.S. agricultural products, soybean prices exhibit seasonal trends.
During the U.S. harvest of September and October, supply increases pressure on the price of beans.
Prices are lifted in winter due to livestock feed demand and show increased volatility in the summer due to weather uncertainty. However, increased South American bean production has somewhat tempered these seasonal trends.
In order to better gauge U.S. supply, traders await the March issuance of the USDA’s Prospective Plantings report, which details the quantity and type of crop that U.S. farmers intend to plant. This information is supplemented with the quarterly Grain Stocks report and the monthly Crop Production report.
Bean traders must also stay attuned to large fluctuations in outside markets. Since soybeans and corn share the same growing land and the price of either influences a farmer’s planting decisions, there is considerable interdependence between all crop prices.