Soybeans Nov '18 (ZSX18)
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||75 cents per bushel ($3,750 per contract) Expanded limit $1.15|
|Contract Size||5,000 bushels|
|Trading Months||Jan, Mar, May, Jul, Aug, Sep, Nov (F, H, K, N, Q, U, X)|
|Trading Hours||7:00p.m. - 7:45a.m. and 8:30a.m. - 1:20p.m. (Sun-Fri) CST|
|Value of One Futures Unit||$50|
|Value of One Options Unit||$50|
|Last Trading Day||The business day prior to the 15th calendar day of the contract month|
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 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 prices (Barchart.com electronic symbol ZS) posted their high for 2017 in January at a 1-1/2 year high of $10.80 a bushel after floods in Argentina, the world's third-largest soybean producer, damaged crops. The upside was limited, however, and soybean prices ratcheted lower into mid-2017 when they posted a 2-year low in June at $9.0025 a bushel. Abundant supplies from record production conspired to push prices lower. The USDA in the June WASDE report raised its 2016/17 global soybean production estimate to a record 351.31 MMT and raised its global soybean ending stocks estimate to a record 93.21 MMT due to record soybean output in Brazil. The downside was limited, however, on voracious Chinese demand as the USDA reported that 2016/17 China soybean imports climbed to a record 88 MMT and U.S. 2016/17 soybean exports climbed to a record 2.174 billion bushels. Soybeans moved sideways within a narrow range for the remainder of the year as expectations for ample supplies limited rallies. Brazil 2016/17 soybean production rose to a record 114.1 MMT. Despite floods earlier in the year, Argentina 2016/17 soybean production rose to a record 57.8 MMT. Also, the USDA projected that U.S. 2017/18 soybean production would climb to a record 4.392 billion bushels and that U.S. 2017/18 soybean ending stocks would rise to an 11-year high of 530 million bushels. In addition, the USDA forecasted that global 2017/18 soybean output would rise to 346.92 MMT, the second-highest ever, and that global 2017/18 soybean ending stocks would rise to a record 98.14 MMT. Despite the outlook for ample supplies, losses in soybeans were contained on signs of exceptional foreign demand for U.S. soybeans with the USDA forecasting that U.S. 2017/18 soybean exports would be the second-highest ever at 2.1 billion bushels. Also, a La Nina weather system in the eastern Pacific Ocean in Q4 raised concerns about limited precipitation in South America that could curb 2017/18 Argentina and Brazil soybean yields. Soybean prices finished 2017 down -4.5% at $9.5175 a bushel.
Supply - World soybean production during the 2017/18 marketing year (Sep-Aug) rose is forecasted to fall -0.8% yr/yr to 348.467 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 in 2017/18 are expected to be the U.S. with 34.6% of world production, Brazil with 31.0%, Argentina with 16.4%, China with 4.1%, and India with 2.9. China's soybean production has roughly doubled since 1980. Brazil's production has risen by almost seven times since 1980.
U.S. soybean production in 2017/18 is forecasted to rise by 2.8% yr/yr to 4.425 billion bushels, a new record high. U.S. farmers are expected to harvest 89.471 million acres of soybeans in 2017/18, rising by +8.2% yr/yr, a new record high. The average yield in 2017/18 is forecasted to be down -4.85% yr/yr to 49.5 bushels per acre, down from last year's record high of 52.0. U.S. ending stocks for the 2016/17 marketing year is expected to rise by +3.2% to 196.7 million bushels.
Demand - Total U.S. distribution in 2017/18 rose +2.2% to 4.307 billion bushels. the distribution tables for U.S. soybeans for the 2017/18 marketing year are expected to show that 51.7% of U.S. soybean usage went for exports, 45.0% went for crushing into soybean oil and meal, and 3.3% for seed and residual. The quantity of U.S. soybeans that will go for crushing is expected to rise +2.2% yr/yr in 2017/18 to 1.940 billion bushels. The world soybean crush in 2017/18 is expected to rise +4.7% yr/yr to a new record high of 301.565 million metric tons, which is about triple the level seen in 1993-94.
Trade - World exports of soybeans in 2016/17 are forecasted to rise +5.8% yr/yr to a new record high of 139.902 million metric tons. The world's largest soybean exporters in 2016/17 are expected to be Brazil with 42.5% of world exports, the U.S. with 39.9%. and Argentina with 6.4%. Brazil's soybean exports have more than doubled in the past decade and Canada's exports have almost tripled. U.S. soybean exports in 2017/18 are forecasted to rise by +56.0% yr/yr to 3.399 billion bushels, a new record high.
World imports in 2017/18 are expected to rise +4.2% yr/yr to a new record high of 150.405 million metric tons. The world's largest importers of soybeans in 2017/18 are expected to be China with 64.5% of world imports, the European Union with 9.3%, Mexico with 2.9%, and Japan with 2.2%. China's imports in 2017/18 are expected to rise +3.7% yr/yr to a record level of 97.000 million metric tons, which is far above the negligible levels prior to 1994.
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