Soybean Nov '22 (ZSX22)
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||115 cents per bushel ($5,750 per contract) Expanded limit $1.75|
|Contract Size||5,000 bushels|
|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. (Settles 1:15p.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. 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 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) traded sideways into Q2-2019 and then plunged in May to an 11-year low of $7.81 per bushel. The ongoing U.S. trade war with China hammered soybean prices after China announced in May that it would raise tariffs on U.S. soybean exports as of June 1. Also, Chinese demand for U.S. soybeans in 2019 fell as the African swine fever ravaged China's hog herd, which cut Chinese demand for soybean-based livestock feed. China also ramped up its domestic soybean output with Chinese 2019 soybean production up +8.8% yr/yr at a 15-year high of 17.4 million metric tons (MMT). Soybean prices stabilized and moved higher into mid-2019 as a wetter-than-normal spring delayed U.S. crop planting. The USDA reported that U.S. soybean plantings as of June 30 were only 92% completed, the slowest pace since 1981. Soybean prices then fell back into late Q3-2019 after China imposed additional tariffs on $75 billion of U.S. goods, including soybeans, starting September 1 as retaliation for U.S. tariffs on Chinese products. Soybean prices rebounded into October as the U.S. and China moved toward their phase-one trade deal in December 2019, which included an agreement by China to buy as much as $50 billion worth of U.S. agricultural goods. Trade tensions and global record supplies prompted U.S. farmers to plant fewer soybeans as U.S. 2019/20 harvested acres fell to an 8-year low of 75.02 million acres, which led to a -19.6% drop in U.S. 2019/20 soybean production to a 6-year low of 3.558 billion bushels. The USDA projected global 2019/20 soybean ending stocks to decline -11.1% to 98.86 MMT from the all-time high of 111.22 MMT seen in 2018/19. Record soybean output from Brazil, the world's biggest soybean exporter, limited the upside in soybean prices after Conab raised its Brazil 2019/20 soybean production estimate to a record 121.09 MMT, up +5.3% y/y. Soybean prices finished 2019 up +6.9% yr/yr at $9.43 per bushel.
Supply - World soybean production during the 2019/20 marketing year (Sep-Aug) is expected to fall -5.7% yr/yr to 337.704 million metric tons. World soybean production has risen sharply from only 80 million metric tons back in the 1980s. The world's largest soybean producers in 2019/20 are expected to be Brazil with 36.4% of world production, the U.S. with 28.7%, Argentina with 15.7%, China with 5.4%, and India with 2.7%. Brazil's production has risen by almost eight-fold since 1980. China's soybean production has roughly doubled since 1980.
U.S. soybean production in 2019/20 is expected to fall by -19.8% yr/yr to 3.550 billion bushels, down from the previous year's record high of 4.428 billion bushels. U.S. farmers harvested 70.626 million acres of soybeans in 2019/20, falling by -13.7 yr/yr and falling far below the 2017/18 record high of 89.542 billion bushels. The average yield in 2019/20 is expected to fall -7.3 yr/yr to 46.9 bushels per acre, well below the 2016/17 record high of 51.9 bushels per acre. U.S. ending stocks for the 2019/20 marketing year are expected to rise by +107.5% yr/yr to 909.1 million bushels, up from 438.1 million bushels in the previous year.
Demand - Total U.S. distribution in 2019/20 rose +0.9% yr/yr to 4.007 billion bushels. The distribution tables for U.S. soybeans for the 2019/20 marketing year show that 52.56% of U.S. soybean usage went for crush, 44.3% went for exports, and 3.2% for seed, feed, and residual. The quantity of U.S. soybeans that will go for crushing is expected to rise +0.6% yr/yr in 2019/20 to 2.105 billion bushels. The world soybean crush in 2019/20 is expected to rise +1.8% yr/yr to a new record high of 303.581 million metric tons, which is about triple the level seen in 1993/94.
Trade - World exports of soybeans in 2019/20 are expected to be virtually unchanged at 149.148 million metric tons, remaining below the 2017/18 record high of 153.065. The world's largest soybean exporters in 2019/20 are expected to be Brazil with 51.0% of world exports, the U.S. with 32.4%, Argentina with 5.5%, Paraguay with 4.2%, and Canada with 3.4%. Brazil's soybean exports have more than doubled in the past decade, and Canada's exports have almost tripled. U.S. soybean exports in 2018/19 rose by +40.5% yr/yr to 2.472 billion bushels.
World soybean imports in 2019/20 are expected to rise +1.4% yr/yr to 147.951 million metric tons but remain below the 2017/18 record high of 153.285. The world's largest importers of soybeans in 2019/20 are expected to be China with 57.5% of world imports, the European Union with 10.3%, Mexico with 4.1%, and Japan and Thailand, each with 2.3%. China's imports in 2019/20 are expected to rise +3.0% yr/yr to 85.000 million metric tons.
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