Reports CTRM for Agricultural and Soft Commodities | Page 52
CTRM for Ags & Softs
Soy Beans
Soybeansare used in the production of edible oils and other food products, including those for both
humans and animals.The use of soybeans as an alternative to animal proteins has driven additional
demand and that growth is expected to continue for the foreseeable future.
Overview
Fifty-five percent of the world's soybean production occurs in the Americas, and the U.S. exports 37% of the world's
soybeans. Originally considered an industrial product prior to 1920, soybeans increasingly found use in human food
products during shortages precipitated by World War II. Since that time, demand for soybeans has continued to increase,
and the amount of arable land dedicated to their cultivation has continually increased until recent years as farmers turned
more cropland to the production of corn.In 2007, the value of the US soybean crop was estimated to be $26.8 billion.
Soy Bean Production
The US has been the largest producer of soybeans globally for many years.However, that lead has shrunk with the
increasing production from Brazil and the lower planting in the US as farmers have increased production of corn in
response to the demand for ethanol.In 2013, the global production of soybeans was:
Soy Bean Production – Oil Seeds, 1000 Metric Tons
1. United States
89,480
2. Brazil
81,720
3. Argentina
49,310
4. China
11,950
5. India
11,950
Soy Bean Trading
Soybeans are traded on the Chicago Mercantile Exchange (CME), the Brazilian Mercantile and Futures Exchange
(BM&F), the Mercado a Termino de Buenos Aires (MATba), the Dalian Commodity Exchange (DCE), the Ka nsai
Commodities Exchange (KANEX), the National Commodity and Derivatives Exchange (NCDEX) and the Tokyo Grain
Exchange (TGE).
Soybean prices are influenced by a number of factors:
As with all crops, weather is the most important factor in production yields and, therefore, price formation.
The amount of arable land dedicated to production – with the increasing demand for corn for ethanol production,
less land has been dedicated to growing soybeans. This linkage with fuel markets will continue to play an
important role in the future and will be influenced by political support for ethanol production.
When processed, soybeans yield two products: soybean meal and soybean oil – each with its own supply and
demand chain and a relationship with one another.
The relationship between these two products yields a trading strategy known as the crush spread, enabling
traders to buy physical soybeans and sell contracts for soybean meal and soybean oil, ensuring that they are
covered in relation to both the supply and demand market forces.
Like grain crops, a concern over the environmental impacts of genetically modified seeds (designed to reduce the
need for pesticides or increase yields) has impacted the trading of soybeans. Nonetheless, as the acceptance of
GM crops is increasing, trade in GM products has increased.
The supply outlook and prices are impacted by The United States Department of Agriculture (USDA) reporting of
Prospective Plantings, which forecasts the amount of acreage dedicated to the growth of crops within the US.
This outlook will impact the prices for soybeans futures in the out years as traders to measure the impact of
increased or reduced supplies. Additionally, the USDA releases a monthly Crop Production report, providing
estimates of the supply and demand for soybeans. The final important report is the Grain Stocksreport, which is
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