Trading Soybean
- Demand, Research and Development


Trading Soybean - Demand, Research and Development

Soybeans aren't sexy... except to a commodities trader. Yet this grain is among the lowest risk, most potentially profitable trades around.

Soybeans were first cultivated in China thousands of years ago, and they continue to be grown there. First arriving in America in the 1800s - they were used to stabilize clipper ships - their use as a food additive has only grown as technology has advanced. When the crops in China were heavily damaged in WWII, the U.S. became one of the largest suppliers.

Thirty-one states in the U.S. now grow soybeans, with Iowa producing over 400 million bushels and Illinois over 500 million.

But the U.S. and Asia now have another major competitor: Brazil. Though suffering from reduced supply the last two years, owing to a long drought, crop yields are recovering and are expected to reach record levels in 2007. Soybeans now rival coffee (along with sugar) as one of Brazil's major exports. In the 2004/5 year, Brazil exported over 20 thousand metric tons of soybeans, two-thirds the U.S. total.


Trading Soybean: Demand is Strong and Rising

At the same time, demand remains strong. American livestock - cattle, chickens and pigs - alone consume over 25 million tons of soybean meal per year. But it's also used in the preparation of dozens of human food products.

That demand is expected to rise, owing to a number of factors that are not likely to be reversed in the foreseeable future.

Population levels throughout most of the world continue to rise. The U.S. population is almost 300 million and still rising. The world population is over 6.5 billion and though the rate of increase is slowing, the level is expected to continue to increase for several decades at least.

Soybeans represent a low-cost food additive that is used the world over that can feed that growing population.


Trading Soybean: Research and Development

Research and development on agricultural yields is continuing to advance. About 1.4 billion hectares were used for cultivation worldwide in 1961. By 1998, less than 40 years later, 1.5 billion hectares were used to grow twice the amount of grain. That's a substantial productivity gain and the advances are just beginning.

Within the last few decades genetics research has improved and scientists now regularly offer implementable genetic techniques to resist disease. By 2005, genetically modified crop production of herbicide-tolerant crops expanded to 87% of soybean production. That figures was only 63% just two years earlier.

Soybean rust continues to be a problem, but there is good reason to believe this can be eliminated in the coming years.

And food isn't the only thing soybeans are used for. Most biodiesel fuel in the U.S. is produced from soybeans, where in Europe canola is used. Corn is used to make ethanol. With rising gasoline prices, pressure continues to encourage converting some vehicles (such as farm equipment) to diesel.


Soybean Futures Contracts

Soybean futures contracts are traded on the CBOT (Chicago Board of Exchange) with the standard contract covering 5,000 bushels. The tick (minimum price fluctuation) is 1/4 cent per bushel, with a maximum price swing per day of 50 cents per bushel above or below the previous day's settlement price.

Investors interested in trading commodities should look into soybeans. Sometimes the plain girl next door is as sexy as any gold-covered Hollywood starlet.


Search 123OnlineTrading.com







Browse Categories:
Stock Trading
Forex Trading
Commodity Trading
Options Trading
Day Trading
Technical Analysis
Real Estate Investing
Bonds Investing
Finance / Economics
For Your Trading Room
 
Online Forex Trading Tips
  Currency Trading  
  Introduction to Forex  
  Reading Forex Quotes  
  Understanding Pips  
  Types of Forex Orders  
  Understanding Margin and Leverage  
  Avoiding Failure in the Forex Market  
  Calculating Profit and Loss  
  Choosing a Forex Broker  
  Forex Trading vs The Stock Market  
  Forex - Fundamental Analysis  
  Technical Analysis  
  Fundamental vs Technical Analysis  
  Traits of Successful Forex Traders  
   
  More About Forex Trading...  
 
Online Commodity Trading Tips
 

Commodity Trading

 
  Intro to Commodities - Part 1  
  Intro to Commodities - Part 2  
  Commodity Exchanges  
  Financial Indexes  
  Commodity Types  
  Reading Commodity Prices  
  Commodities - Margins  
  Commodities - Leverage  
  Trading Coffee  
  Trading Silver  
  Trading Uranium  
  Trading Soybean  
  Trading Oil  
   
  More About Commodities Trading...  
 
Online Options Trading Tips
 

Online Options Trading

 
  Options 101  
  Calls and Puts  
  Options Trading 101  
  Options Trading 102  
  Options - Risk Management  
  How To Read Options Listings  
  Trading Strategies - Basic Concepts  
  Trading Strategies - Profit and Risk  
  The Greeks - Part 1  
  The Greeks - Part 2  
  Values and Prices - Part 1  
  Values and Prices - Part 2  
   
  More About Options Trading...  
 
Real Estate Investing
  Real Estate Investing  
  Getting Started in Real Estate  
  Questions To Ask Before Investing  
  Real Estate - Your First Time  
  Finding and Evaluating Property  
  Inspections Save You Money  
  Cheap Repairs, Big Profits  
  Keep Your Cash For A Rainy Day  
  Insurance and Risk Management  
  Managing Risk - Part 1  
  Managing Risk - Part 2  
     
  More About Real Estate Investing...