Soybean Jul '22 (ZSN22)

Description

Soybean is the common name for the annual leguminous plant and its seed. Soybeans are oilseeds and are not considered grains. The soybean seeds are contained in pods and are nearly spherical. The seeds are usually light yellow. The seeds contain 20% oil and 40% protein. Soybeans were an ancient food crop in China, Japan, and Korea, and were introduced to the US only in the early 1800s. Today, soybeans are the second-largest crop produced in the US, behind corn. Soybean production in the US is concentrated in the Midwest and the lower Mississippi Valley. Soybean crops in the US are planted in May or June and are harvested in the 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, making soybeans 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 is at the CME Group. The CME'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 6 cents under the contract price). Soybean futures are also traded at exchanges in Brazil, Argentina, China, and Tokyo.

Prices - CME soybean futures (Barchart.com symbol ZS) moved sideways to higher in the first half of 2025 amid an outlook for smaller global output and supplies. In the February 2025 WASDE report, the USDA cut its 2024/25 global soybean production and global ending stocks estimates by more than expected. Also, foreign demand for US soybeans ramped up as countries made purchases ahead of expected US tariffs, with US Dec soybean exports surging 68% yr/yr to 293 million bushels. Trade turmoil limited the upside in soybean prices in early 2025 after President Trump in April increased tariffs on Chinese imports to 125%, prompting China to retaliate with an 84% tariff on US goods, essentially halting Chinese imports of US soybeans. Tighter US supplies limited downside in prices, as the USDA in the May WASDE report cut its US 2025/26 soybean ending stocks estimate by -16% yr/yr to a 2-year low of 295 million bushels. Also, the USDA cut its US 2025/26 soybean planted acreage estimate by -4% yr/yr to a 5-year low of 83.5 million acres. Soybean prices retreated into Q3 when they fell to a 1-year low of $9.61 per bushel in July. Weak demand for US soybean meal knocked soybean meal prices to a 9-year low in July, weighing on soybean prices. Also, ideal summer weather in the central US improved the outlook for the US soybean crop, undercutting prices. Soybean prices then turned higher as the dollar weakened, with the dollar index falling to a 4-year low in September, bolstering the outlook for US exports. Also, China and the US announced a trade truce in October, which pushed soybean prices to a 1-1/2 yr high of $11.70 per bushel in November. The USDA announced a sale of 792,000 MT of soybeans to China in November, the largest monthly purchase from the US in two years. Soybean prices then turned lower into year-end as global supplies remained abundant, following Brazil's projection of a record 2025/26 soybean crop of 177.1 MMT. Soybean prices finished 2025 up by +3.3% yr/yr at $10.31 per bushel.

Supply - World soybean production during the 2025/26 marketing year (Sep-Aug) fell by -0.3% yr/yr to a record 425.679 million metric tons. World soybean production has risen sharply from only 90 million metric tons back in the 1980s. The world's largest soybean producers in 2025/26 are Brazil (41.8% of world production), the US (27.2%), Argentina (11.4%), China (4.9%), and Paraguay (3.0%).

The US soybean production in 2025/26 fell by -2.6% yr/yr to 115.989 million metric tons. US farmers harvested 80.437 million acres of soybeans in 2025/26, down by -6.7% yr/yr. The average yield in 2025/26 rose by +4.4% yr/yr to 53.0 bushels per acre, above the 2016/17 record high of 51.9 bushels per acre. US ending stocks for the 2025/26 marketing year fell by -9.2% yr/yr to 299.6 million bushels.

Demand - Total US soybean distribution in 2025/26 fell by -1.2% yr/yr to 4.351 billion bushels. The distribution tables for US soybeans for the 2025/26 marketing year show that 58.7% of US soybean use will go to crushed oil and meal products, 38.7% to exports, and 2.6% to seed, feed, and residual uses. The quantity of US soybeans that will go for crushing rose by +5.1% yr/yr in 2025/26 to 2.555 billion bushels. The world soybean crush in 2025/26 rose by +2.2% yr/yr to a new record high of 366.432 million metric tons.

Trade - World exports of soybeans in 2025/26 rose by +1.6% to 187.568 million metric tons. The world's largest soybean exporters in 2025/26 are Brazil (with 60.8% of world exports), the US (22.9%), Argentina (4.4%), Paraguay (4.1%), and Canada (2.7%). Brazil's soybean exports have more than doubled in the past decade. US soybean exports in 2024/25 rose by +10.7% yr/yr to 1.883 billion bushels.

World soybean imports in 2025/26 rose by +3.7% yr/yr to 186.039 million metric tons. The world's largest importers of soybeans in 2025/26 are China (60.2% of world imports), the European Union (7.5%), Mexico (3.6%), and Egypt (2.6%). China's imports in 2025/26 rose by +3.7% yr/yr to 112,000 million metric tons.

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