Soybean is the common name for the annual leguminous plant and its seed. The soybean is a member of the oilseed family and is not considered a grain. The soybean seeds are contained in pods and are nearly spherical in shape. The seeds are usually light yellow in color. The seeds contain 20% oil and 40% protein. Soybeans were an ancient food crop in China, Japan, and Korea and were only introduced to the U.S. in the early 1800s. Today, soybeans are the second largest crop produced in the U.S. behind corn. Soybean production in the U.S. is concentrated in the Midwest and the lower Mississippi Valley. Soybean crops in the U.S. are planted in May or June and are harvested in autumn. Soybean plants usually reach maturity 100-150 days after planting depending on growing conditions.
Soybeans are used to produce a wide variety of food products. The key value of soybeans lies in the relatively high protein content, which makes it an excellent source of protein without many of the negative factors of animal meat. Popular soy-based food products include whole soybeans (roasted for snacks or used in sauces, stews and soups), soy oil for cooking and baking, soy flour, protein concentrates, isolated soy protein (which contains up to 92% protein), soy milk and baby formula (as an alternative to dairy products), soy yogurt, soy cheese, soy nut butter, soy sprouts, tofu and tofu products (soybean curd), soy sauce (which is produced by a fermentation process), and meat alternatives (hamburgers, breakfast sausage, etc).
The primary market for soybean futures and options is at the Chicago Board of Trade (CBT), division of the CME Group. The CBOT's soybean contract calls for the delivery of 5,000 bushels of No. 2 yellow soybeans (at contract par), No. 1 yellow soybeans (at 6 cents per bushel above the contract price), or No. 3 yellow soybeans (at a 6 cents under the contract price). Soybean futures are also traded at exchanges in Brazil, Argentina, China, and Tokyo.
Prices - Soybean futures prices (Barchart.com symbol S) in Q1 of 2013 moved sideways as the bearish factors of a record Brazil soybean crop (+23% y/y to 81.5 MMT according to Brazil's Conab) were offset by strong Chinese demand for U.S. soybeans and tight U.S. 2012/13 soybean ending stocks of a 9-year low of 125 million bushels. Soybean prices moved higher in Q2 and rallied to a 1-1/4 year high of $16.30 a bushel in July 2013. A wetter-than-normal spring led to planting delays with only 71% of the U.S. soybean crop planted as of June 9, 2013, well behind the 5-year average of 84% and the slowest pace of planting in 17 years. Also, immediate soybean supplies were tight after the USDA quarterly stocks estimate pegged U.S. soybean inventories as of June 1, 2013 at 434.5 million bushels, the lowest since 2004. Robust Chinese soybean demand was supportive for soybean prices in 2013 with China 2013 soybean imports up +8.6% y/y at a record 63.4 MMT. Soybean prices retreated during Q3 as favorable weather boosted the prospects for the late-planted U.S. soybean crop along with a record 2012/13 South American soybean crop of 145 MMT. Soybean prices remained weak in Q4 and posted a 2-year low of $12.55 a bushel in November 2013 after the USDA in the November WASDE report hiked its U.S 2013 soybean production estimate to 3.258 billion bushels, the third-highest ever. The USDA also raised its 2013/14 soybean crop estimate for Brazil, set to become the world's top producer, to a record 88 MMT, up +8% y/y. Soybean prices finished 2013 down -7.5% at $13.125 a bushel. In early 2014, the USDA forecasted a +7.2% y/y increase in 2013/14 global soybean production to a record 287.69 MMT and a +24.5% increase in global soybean ending stocks to a record 73.03 MMT. The U.S. 2013/14 soybean stocks-to-use ratio was tight at 4.5%, well below the 10-year average of 7.9%, although the world stocks-to-use ratio was plentiful at 27.1%, well above the 10-year average of 23.3%.
Supply - World soybean production during the 2013-14 marketing year (Sep-Aug) rose by +7.2% yr/yr to 287.693 million metric tons. World soybean production has risen sharply from the 62 million metric ton level seen in 1980. The world's largest soybean producers were Brazil with 31.3% of world production in 2013-14, the U.S. (31.1%), Argentina (18.8%), China (4.2%), and India (4.1%). China's soybean production has roughly doubled since 1980. Brazil's production has risen just over four times since 1980.
U.S. soybean production in 2013-14 rose by +8.4% yr/yr to 3.288 billion bushels, below the record high of 3.359 in 2009-10. U.S. farmers harvested 75.869 million acres of soybeans in 2013-14, which fell -0.4% yr/yr, below the 2010-11 record high of 76.610 million acres. The average yield in 2013-14 is up +8.8% yr/yr to 43.3 bushels per acre, under the record high of 44.0 bushels per acre. U.S. ending stocks for the 2013-14 marketing year fell by -17.0% to 140.6 million bushels.
Demand - Total U.S. distribution in 2013-14 rose +6.6% to 3.304 billion bushels. The distribution tables for U.S. soybeans for the 2013-14 marketing year show that 51.5% of U.S. soybean usage went for crushing into soybean oil and meal, 42.3% for exports, and 3.3% for seed and residual. The quantity of U.S. soybeans that went for crushing rose +0.6% yr/yr in 2013-14 to 1.700 billion bushels. The world soybean crush rose +4.3% yr/yr in 2013-14 to a new record high of 238.745 million metric tons, which was about double the level seen in 1993-94.
Trade - World exports of soybeans in 2013-14 rose +9.5% yr/yr to a new record high of 109.326 million metric tons. The world's largest soybean exporters in 2013-14 were Brazil with 41.2% of world exports, the U.S. with 37.6% of world exports, and Argentina with 7.3% of world exports. U.S. soybean exports in 2013-14 rose +14.4% yr/yr to a 41.096 million metric tons, a new record high. Brazil's soybean exports have more than doubled in the past decade and Canada's exports have almost tripled.
World imports in 2013-14 rose +10.6% yr/yr to a new record high of 105.332 million metric tons. The world's largest importers of soybeans in 2013-14 were China with 65.5% of world imports, the European Union with 11.7%, Mexico with 3.5%, and Japan with 2.7%. China's imports in 2013-14 rose +15.3% yr/yr to a record level of 69.000 million metric tons, which is far from negligible levels prior to 1994.
Articles from the Commodity Research Bureau (CRB) Commodity Yearbook. The single most comprehensive source of commodity and futures market information available, the Yearbook is the book of record of the Commodity Research Bureau, which is, in turn, the organization of record for the commodity industry itself. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope is second to none. Additional information can be found at www.crbyearbook.com.