Soybean futures on the Chicago Board of Trade are entirely electronic, exchange-traded commodities (CBOT). Soybeans have an almost endless number of applications. They’re a key ingredient in a variety of foods, and they’re increasingly being recognized as a renewable resource with a wide range of industrial applications. Soybean futures provide traders with a highly liquid tool for managing risk and diversifying their portfolios by allowing them to trade this major agricultural commodity.
What is the best way to trade soybean futures?
Soybeans futures can be traded on the CME Market/Chicago Board of Trade (CBOT) Globex electronic exchange or on the ICE futures exchange. There are two types of soybean futures contracts available on the CME platform. The ticker XK is for mini-sized soybeans, whereas the ticker ZS is for regular-sized soybeans.
What will the soybean price be in the future?
According to Trading Economics global macro models and analysts, soybeans are likely to trade at 1784.30 USd/BU by the end of this quarter. Looking ahead, we expect it to trade at 1861.44 in a year’s time.
Is there a soybean exchange-traded fund?
ETFs that track soybean futures contracts are known as soybean ETFs. In the United States, SOYB is the sole ETF available. Soybeans ETF has a total asset under management of $69.75 million and is traded in the US markets. 1.88 percent is the average expense ratio.
Is it wise to invest in soybeans?
If you’re a seasoned investor, you’re probably already aware with the term “exchange-traded fund,” or ETF, but for those of you who aren’t, we thought we’d explain. An ETF is a collection of funds or securities that can include stocks, but it is not the same as actual stocks. When it comes to ETFs, you can invest in a variety of things, including our topic, soybeans. Because they may be traded like stocks, they are referred to as a “exchange traded fund.” This is not the same as investing in mutual funds, which are not traded on a stock exchange. They do, however, have the advantage of diversification, just like mutual funds. Soybean ETFs are exchange-traded funds that invest in soybeans and provide investors with a glimpse into the future of the crop. This ETF does not require a futures exchange account. With this option, the investor is better able to make appropriate investment decisions and so get better returns on their money.
- The asset owner, or ‘fund provider,’ establishes a fund to track asset progress.
- The fund provider sells’shares’ of the fund to anyone interested in investing (the shareholders own the shares, but not the assets)
- In exchange, investors receive ‘lump dividend payments,’ which can be re-invested.
- During the day, buyers and sellers can trade the stock on the exchange for a profit.
Soybean ETFs, in particular, are thought to be a good investment for younger investors for a variety of reasons. For starters, there are modest costs, which is great for individuals who are just getting started. Second, because of the large range of options, they make management simple. They’re also simple to sell, and there are plenty to select from. Soybean ETFs, on the other hand, have some drawbacks. Some of the setbacks that investors may face, and should be aware of and on the lookout for, according to Investopedia, include:
- Pay Attention to Fees While ETFs are normally low-cost investments, you may come across costs that are inflated, and you may be taken for a ride.
- ‘Capital Gains Distribution’ This form of return entails paying a ‘capital gains tax,’ so keep that in mind before investing.
- Unseen Hazards and Fluctuations There will be times when the finer, more significant changes, as well as the risks associated with them, are not immediately apparent…dive before investing!
- Liquidation Difficulties – While most soybean ETFs will be easier to liquidate than others, there may be situations when this is not the case. Before you put your money in, make sure you understand the situation. There are many fine points to investing, therefore the key is to be informed…educate yourself well before investing your money, and you will have less regrets in the long run. So, how should you go about making a fashion investment?
A futures contract contains how many bushels of soybeans?
One futures contract for soybeans, for example, represents 5,000 bushels of soybeans. As a result, the contract’s monetary value is 5,000 times the price per bushel. The contract’s worth is $28,500 ($5.70 x 5,000 bushels) if the market is trading at $5.70 a bushel. The maintenance margin necessary for one contract of soybeans, according to exchange margin standards in effect on Jan. 23, 2022, is roughly $2,650.
Futures contracts
A futures contract is the most frequent way for traders to enter the soybean market. Futures contracts allow traders to agree on the delivery of a specific quantity of soybeans, soybean oil, or soybean meal at a specific price at a future date. With a futures contract, however, a trader may be required to take delivery of the soybeans at some point. This could be a concern unless they have enough storage facilities.
Contracts for difference
CFDs allow you to make predictions on the price movements of soybean markets without having to possess the actual assets. CFDs can be used as a hedge for your other active positions because they allow you to go short or long in order to profit from both market dips and advances.
Why is the price of soybean oil rising?
Unfavorable weather in major oil-exporting countries such as Indonesia, Malaysia, Argentina, Ukraine, and Russia, which hampered oil production, along with a labor shortage in Malaysia as a result of the epidemic, resulted in a drop in shipments from the world’s top oil producers.
Last year, Indonesia and Malaysia implemented B30 and B20 biofuel requirements, which raised the amount of vegetable oils in fuel, resulting in higher domestic consumption and a reduced exportable surplus.
Because of dry weather in Argentina, the largest exporter, and increased demand from key users India and China, soybean oil prices climbed last year. Due to drought-like circumstances in Ukraine and Russia, sunflower oil prices have risen.
Will the price of soybeans rise in 2021?
According to the USDA’s Wasde reports, prices continued to rise sharply in the first half of 2021, aided by successive downgrades of US ending stocks.
This was supported by lower US production predictions since the end of 2020, as well as increased exports, which were boosted in part by a late harvest in Brazil, which widened the US export window.
Since the second quarter of 2020, soybean prices have also been supported by monetary policies championed by the US Federal Reserve and other central banks around the world in response to the economic shock caused by the Covid-19 pandemic’s emergence.
As investors sought greater rates, extra liquidity poured into higher risk assets, such as commodities.
Commodity prices were boosted further in 2021 by a slew of financial flows connected to growing inflation around the world, as commodities are commonly used as inflation hedges.
Following projections that projected an increase in supplies and ending stocks for 2021-2022, as well as improvements to 2020-2021 ending stocks, soybean prices began to fall from multi-year highs in June 2021.
On the demand side, waning Chinese demand combined with long-term negative crush margins and low hog prices in the domestic market to further erode bean support.
Spot crush margins in China fell negative in March and stayed negative until October, slowing the country’s soybean purchases during this time.
Front-month future contracts on the CBOT were trading between $12.30 and $12.92 c/bu in December, down 25% from May’s highs but still roughly 42% higher than the average price between mid-2018 and mid-2020.