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The Learn About Futures Insider For August 25, 2011: Soybeans
learnfuturesfk
post Aug 25 2011, 07:03 PM
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Among the five sacred plants of ancient China, soybeans have expanded well beyond their original land of cultivation and now reign as the second most valuable crop in the United States. As a food product, soybeans have been alternately lauded for their potential health benefits and regarded with suspicion as to potential hazards. Overall, soybeans have a fair share of interest - as well as controversy - but are an important part of farming in both hemispheres.

Contract Size: 5,000 Bushels

Price Quote & Tick Size: Cents per bushel; minimum fluctuation is ¼ cent per bushel ($12.50 per contract)

Contract Months: January, March, May, July, August, September, November

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: 6:00 pm - 7:15 am and 9:30 am - 1:15 pm Central Time, Sunday - Friday
Open Auction: 9:30 am - 1:15 pm Central Time, Monday - Friday

Daily Price Limit: $0.70 per bushel expandable to $1.05 and then to $1.60 when the market closes at limit bid or limit offer. There shall be no price limits on the current month contract on or after the second business day preceding the first day of the delivery month.

Trading Symbols: Open Outcry - S; Electronic - ZS



Past performance is not indicative of future results.
***chart courtesy of Gecko Software


Soybean Facts


Soybeans have been cultivated for food and other uses for nearly five millennia. Originally native to eastern Asia, the modern farming areas for this oilseed occur on nearly every continent. In the United States they were originally considered an industrial product and after their initial introduction to North America they were grown for hay. It was only during the twentieth century that America began to use soybeans as a food product. Noteworthy global distribution of production, imports, and exports is as illustrated in the following charts:


*Data courtesy of USDA/NASS


*Data courtesy of USDA/NASS


*Data courtesy of USDA/NASS


Since soybeans are produced in large quantities in both the northern and southern hemispheres, crop news and weather is relevant nearly all year. Cultivation is most successful in climates with hot summers and plenty of sunshine – up to and over 14 hours per day – can be important to the flowering stage of a soybean plant. The complete sowing to harvesting cycle for the modern soybean varieties can take anywhere from 80 to 120 days. Their growth cycle is roughly as illustrated:



Soybeans come in a variety of colors from black and brown to gray and yellow. Most commercial soybeans in the United States are of the yellow variety.

Price highlights for this market include:

- Soviet purchases of grains in 1972 sparked a rally in soybean prices that went from less than $4 per bushel to more than $12.
- A shift in the US government's policies and a jump in Brazil's soybean production led to a drop in prices after 1973's high.
Volatility remained, bolstered by the Soviet Union's 1979 grain embargo.
- In 1988, prices topped $10 per bushel again as drought was forecast to cut production by almost 40 percent. The following year soybean prices dipped back below $6.
- Prices peaked again in 1997, driven by strong exports causing concerns for potentially low ending stocks in the US.
- Bumper crops towards the end of the 1990s brought prices back down towards $4 per bushel.
- Back to back seasons of lower production, and damage from aphids brought renewed fears of low supplies of soybeans in 2004. This helped spike prices back over $10 per bushel.
- 2008 delivered fresh demand for soybeans in biodiesel and other applications, and flooding in US growing areas helped propel the market to fresh highs around $16.60 per bushel. A strong sell off ensued, but prices stayed above the levels seen in the early 2000s.


Key terms for soybeans include the following:

Crush spread – A spread trading strategy that involves soybeans vs soybean meal and oil.

Soybean rust – Often heard in the news as it is one of the diseases for which commercial soybean varieties lack resistance at this time. Infected plants can produce smaller yields and smaller beans. Rust is spread by wind and thrives in areas of high moisture and moderate temperatures. Infected plants are treated with fungicide.

Key Uses


Oil – Soybeans undergo a process to extract oil destined for a variety of processed foods and commercial products.

Livestock Feed – Soybeans are rich in proteins and the meal left over from oil production is used as livestock feed for everything from chickens and hogs to catfish.

Human Food – From infant formula to tofu, the number of products in supermarkets that contain soy have grown in recent years. Soy milk, soy yogurt, soy crisps, toasted soy nuts, and even immature pods that we refer to as edamame are a part of many modern diets.

Industrial and Commercial Products – Soybeans are a part of some surprising everyday items. From plastics to solvents, soybeans are even used to produce cloth. The idea of using agricultural products in industry is not as new - Ford was a notable early pioneer in non-food applications of soybeans. Soybean derivatives were added to plastic parts in Ford vehicles. The Ford Company was recently suggesting that soybeans can be used for producing parts for cars, namely car seats. Henry Ford is also credited with suggesting that an alternative to gas was needed.

Fuel – Biodiesel from soybean oil has been used for many years now and the recent increased fervor to produce alternative fuels may yield additional research for both new and used soybean oil.

Key Concerns


Weather – As with most field crops, soybeans have sensitivities to light, temperature, and moisture. When planting, soybeans perform best when soil has warmed to 50 degrees Fahrenheit or better since they are susceptible to frost damage. Early planting in cool, wet soils reduces the likelihood of germination and increases risks of disease. During the full maturity stage, anywhere from five to ten days of dry weather are required to reduce moisture levels in the soybeans to less than 15 percent. Long storage periods will mean less moisture is desirable in beans to prevent mold and spoilage issues.

Genetic Modification – With the advent of biotechnology and the ability of scientists to adjust and modify plants for particular traits comes controversy over the impact on biodiversity. Roundup Ready crops allow farmers to sow seeds directly and possibly reducing soil erosion with no-till farming; however, there are theories that breeding the gene directly into many soybean cultivars may reduce genetic diversity, which can open up a whole host of problems - including disease resistance. Many countries do not allow GM crops, which causes export issues; especially when no GM stocks are cross contaminated with GM crops.

Disease and Pests – Again, as with most field crops, soybeans can play host to any number of plant and bean devastating molds or pests. Some diseases may destroy parts of the plant while others threaten the soybeans directly. Of the most widely recognized issues, a few are listed below:

Phytophthora Root Rot – Spread by spores from infected plants in soil and occurs most frequently in areas of clay soils and in flooded soils. Kills roots.

Soybean Cyst Nematode – A microscopic roundworm that infects soybeans roots and causes significant loss in soils where it is abundant – as much as 20 bushels an acre can be lost in a dry year and in sandy soils.

Septoria Brown Spot – A common leaf disease that can lead to up to fifteen percent yield losses. This fungus spreads in warm, humid weather.

With many pests and diseases, fungicides, crop rotation and early identification and proactive response can control and reduce risks to the crop.

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
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KPitts
post Mar 11 2013, 02:51 AM
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QUOTE (learnfuturesfk @ Aug 25 2011, 07:03 PM) *
Among the five sacred plants of ancient China, soybeans have expanded well beyond their original land of cultivation and now reign as the second most valuable crop in the United States. As a food product, soybeans have been alternately lauded for their potential health benefits and regarded with suspicion as to potential hazards. Overall, soybeans have a fair share of interest - as well as controversy - but are an important part of farming in both hemispheres.

Contract Size: 5,000 Bushels

Price Quote & Tick Size: Cents per bushel; minimum fluctuation is ¼ cent per bushel ($12.50 per contract)

Contract Months: January, March, May, July, August, September, November

Trading Specs: Trades open outcry and Globex (electronic) per the following schedule:
Electronic: 6:00 pm - 7:15 am and 9:30 am - 1:15 pm Central Time, Sunday - Friday
Open Auction: 9:30 am - 1:15 pm Central Time, Monday - Friday

Daily Price Limit: $0.70 per bushel expandable to $1.05 and then to $1.60 when the market closes at limit bid or limit offer. There shall be no price limits on the current month contract on or after the second business day preceding the first day of the delivery month.

Trading Symbols: Open Outcry - S; Electronic - ZS



Past performance is not indicative of future results.
***chart courtesy of Gecko Software


Soybean Facts


Soybeans have been cultivated for food and other uses for nearly five millennia. Originally native to eastern Asia, the modern farming areas for this oilseed occur on nearly every continent. In the United States they were originally considered an industrial product and after their initial introduction to North America they were grown for hay. It was only during the twentieth century that America began to use soybeans as a food product. Noteworthy global distribution of production, imports, and exports is as illustrated in the following charts:


*Data courtesy of USDA/NASS


*Data courtesy of USDA/NASS


*Data courtesy of USDA/NASS


Since soybeans are produced in large quantities in both the northern and southern hemispheres, crop news and weather is relevant nearly all year. Cultivation is most successful in climates with hot summers and plenty of sunshine – up to and over 14 hours per day – can be important to the flowering stage of a soybean plant. The complete sowing to harvesting cycle for the modern soybean varieties can take anywhere from 80 to 120 days. Their growth cycle is roughly as illustrated:



Soybeans come in a variety of colors from black and brown to gray and yellow. Most commercial soybeans in the United States are of the yellow variety.

Price highlights for this market include:

- Soviet purchases of grains in 1972 sparked a rally in soybean prices that went from less than $4 per bushel to more than $12.
- A shift in the US government's policies and a jump in Brazil's soybean production led to a drop in prices after 1973's high.
Volatility remained, bolstered by the Soviet Union's 1979 grain embargo.
- In 1988, prices topped $10 per bushel again as drought was forecast to cut production by almost 40 percent. The following year soybean prices dipped back below $6.
- Prices peaked again in 1997, driven by strong exports causing concerns for potentially low ending stocks in the US.
- Bumper crops towards the end of the 1990s brought prices back down towards $4 per bushel.
- Back to back seasons of lower production, and damage from aphids brought renewed fears of low supplies of soybeans in 2004. This helped spike prices back over $10 per bushel.
- 2008 delivered fresh demand for soybeans in biodiesel and other applications, and flooding in US growing areas helped propel the market to fresh highs around $16.60 per bushel. A strong sell off ensued, but prices stayed above the levels seen in the early 2000s.


Key terms for soybeans include the following:

Crush spread – A spread trading strategy that involves soybeans vs soybean meal and oil.

Soybean rust – Often heard in the news as it is one of the diseases for which commercial soybean varieties lack resistance at this time. Infected plants can produce smaller yields and smaller beans. Rust is spread by wind and thrives in areas of high moisture and moderate temperatures. Infected plants are treated with fungicide.

Key Uses


Oil – Soybeans undergo a process to extract oil destined for a variety of processed foods and commercial products.

Livestock Feed – Soybeans are rich in proteins and the meal left over from oil production is used as livestock feed for everything from chickens and hogs to catfish.

Human Food – From infant formula to tofu, the number of products in supermarkets that contain soy have grown in recent years. Soy milk, soy yogurt, soy crisps, toasted soy nuts, and even immature pods that we refer to as edamame are a part of many modern diets.

Industrial and Commercial Products – Soybeans are a part of some surprising everyday items. From plastics to solvents, soybeans are even used to produce cloth. The idea of using agricultural products in industry is not as new - Ford was a notable early pioneer in non-food applications of soybeans. Soybean derivatives were added to plastic parts in Ford vehicles. The Ford Company was recently suggesting that soybeans can be used for producing parts for cars, namely car seats. Henry Ford is also credited with suggesting that an alternative to gas was needed.

Fuel – Biodiesel from soybean oil has been used for many years now and the recent increased fervor to produce alternative fuels may yield additional research for both new and used soybean oil.

Key Concerns


Weather – As with most field crops, soybeans have sensitivities to light, temperature, and moisture. When planting, soybeans perform best when soil has warmed to 50 degrees Fahrenheit or better since they are susceptible to frost damage. Early planting in cool, wet soils reduces the likelihood of germination and increases risks of disease. During the full maturity stage, anywhere from five to ten days of dry weather are required to reduce moisture levels in the soybeans to less than 15 percent. Long storage periods will mean less moisture is desirable in beans to prevent mold and spoilage issues.

Genetic Modification – With the advent of biotechnology and the ability of scientists to adjust and modify plants for particular traits comes controversy over the impact on biodiversity. Roundup Ready crops allow farmers to sow seeds directly and possibly reducing soil erosion with no-till farming; however, there are theories that breeding the gene directly into many soybean cultivars may reduce genetic diversity, which can open up a whole host of problems - including disease resistance. Many countries do not allow GM crops, which causes export issues; especially when no GM stocks are cross contaminated with GM crops.

Disease and Pests – Again, as with most field crops, soybeans can play host to any number of plant and bean devastating molds or pests. Some diseases may destroy parts of the plant while others threaten the soybeans directly. Of the most widely recognized issues, a few are listed below:

Phytophthora Root Rot – Spread by spores from infected plants in soil and occurs most frequently in areas of clay soils and in flooded soils. Kills roots.

Soybean Cyst Nematode – A microscopic roundworm that infects soybeans roots and causes significant loss in soils where it is abundant – as much as 20 bushels an acre can be lost in a dry year and in sandy soils.

Septoria Brown Spot – A common leaf disease that can lead to up to fifteen percent yield losses. This fungus spreads in warm, humid weather.

With many pests and diseases, fungicides, crop rotation and early identification and proactive response can control and reduce risks to the crop.


I have a soybean investment with GCAP Management and this article has helped me understand the market a little bit more. Thank you guys always good to do your research. smile.gif
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