Soybeans are one of the largest agricultural crops produced in the Unites States. According to the EPA, approximately 2.8 billion bushels of soybeans were harvested from almost 73 million acres of cropland in the United States in 2000. This provides an enormous investment opportunity. While investors can participate indirectly by owning fertilizer companies and other agricultural stocks, there are only three investment vehicles that provide direct exposure to soybean prices: futures, futures options and exchange-traded investments. Each of these investment types have distinct features that should be considered.
Individuals can invest in soybeans using futures contracts and other exchange-traded assets.
Understanding Soybean Futures
A futures contract is described by the National Futures Association (NFA) as a legal obligation to buy or sell a commodity or financial instrument at a later date. Soybean futures are traded on the Chicago Board of Trade in either open outcry (trading pit) or electronic format.
One contract represents 5,000 bushels of soybeans, while one mini-sized contract represents 1,000 bushels. Contract holders (buyers) are legally obligated to take physical delivery upon expiration. To avoid physical delivery, contract holders can exit their positions prior to expiration.
Purchasing Soybean Futures Options
Another way to avoid physical delivery is to purchase options on soybean futures. CME Group defines futures options as contracts that give the bearer the right, but not the obligation to buy or sell futures within a specified time period at a predetermined (strike) price. Investors desiring the right to buy soybean futures purchase "calls," while those wanting the right to sell soybean futures buy "puts." Options may be traded for gain or used as insurance against loss. If left unexercised, options expire worthless.
Exploring Exchange-traded Investments
Exchange-traded investments in soybeans include ETFs, ETNs and commodity pools. They're traded on the New York Stock Exchange, can be actively or passively managed and have an internal expense ratio. The PowerShares DB Agriculture Fund (DBA) is a diversified agricultural ETF that invests in soybean, corn, live cattle and many other agricultural futures.
The iPath Grains Total Return Sub-Index (JJG) is an ETN that invests only in soybean, corn and wheat futures. The Teucrium Soybean Fund (SOYB) is a commodity pool that invests solely in soybean futures. Each of these funds offer different levels of diversification. Investors can take long and short positions, allowing them to profit whether prices rise or fall.
Other Valuable Considerations
While soybean futures, options and exchange-traded investments come with their own unique risks, they're all affected by the same overall market influences that determine supply and demand. Investors should keep a constant eye on acreage intentions, carry costs and expenses, crop yields, international trade, stockpiles and weather. As these dynamic influences continually change, prices respond accordingly.
Investors have several opportunities to invest in the soybean market, including soybeans shares, soybeans CFDs, soybeans ETFs, soybeans futures, and soybeans options futures. The price of soybean is highly correlated with other agricultural commodities, especially corn.
Soybean biologicals remain a good investment - Brownfield Ag News. An agronomist says soybean seed inoculants remain a good investment for farmers. Kurt Seevers with Verdesian says the rhizobia in the treatment helps provide adequate nitrogen for crops without having to add as much fertilizer.
With 1 ETF traded in the U.S. markets, Soybeans ETF gathers total assets under management of $34.88M. The average expense ratio is 1.91%. Soybeans ETF can be found in the following asset class: Commodities.
A 65-bushel yield for soybeans would require a price of $13.29 per bushel to break even. With November 2023 soybean futures trading at $13.81 per bushel, an expected yield of 65 bushels would result in a producer return of $34 per acre.
For 2021, a trend yield of 68 bushels per acre is used and the projected soybean price of $8.35 per bushel, giving crop revenue of $568 per acre. With a $30 per acre ARC/PLC payment, gross revenue in 2021 is projected at $598 per acre.
As with corn, soybean yields are expected to recover from a 4-year low of 49.8 bushels per acre in 2022/23 after dry growing conditions. Yields are expected to increase to 52.0 bushels per acre in 2023/24 and to 56.5 bushels by 2032/33.
Corn is projected to be more profitable than soybeans, as has been the case in our three revisions of 2022 Crop Budgets (see farmdoc daily, April 12, 2022). The switch to soybeans from corn signaled in the Planting Intentions Report released on March 31 caused prices to swing even more in favor of corn.
Brazil was the largest soybean exporter in the world in 2020 followed by the United States, Argentina, Paraguay and Canada. Brazil exported 86 million metric tons of soybeans in 2020, accounting for roughly 50% of the world's exports.
The most common way that traders take a position in soybean markets is with a futures contract. Futures contracts enable traders to agree to the delivery of a certain amount of soybeans, soybean oil or soybean meal at a set date in the future for an agreed upon price.
Soybean Production by Country: Contribution to World Total
As can be seen, Brazil and the USA combine for over 60% of all soybean production in the world. Brazil is the second-largest producer of soybeans in the United States.
As a general rule of thumb I recommend farmers purchase a bag of seed per acre (140,000 seed count) and plant that entire bag per acre (140,000 seeds) (Figure 1). Remember your target is to get a minimum stand of 100,000 plants per acre as this population will achieve 100% yield potential in most field environments.
More than 80 percent of soybeans are cultivated in the upper Midwest. The Unites States counted Illinois, Iowa, and Minnesota as their leading soybean producing states as of 2022.
Average costs per acre for soybean ranged from $168 to $204 and average cost per bushel ranged from $3.30 to $4.19. Average returns per acre ranged from $62 to $194. Better efficiency (low cost per bushel) occurs with higher yields.
(DTN) -- Raising a corn crop cost an average 19% more in 2022 than in 2021, with higher fertilizer, chemical and fuel costs largely to blame. USDA released updated estimates on Tuesday showing it cost an average of $882 per acre to raise corn and $598 per acre to raise soybeans.
But keep in mind that planting soybean in back-to-back seasons not only increases the potential for the development of herbicide-resistant weeds, but also creates problems with control of herbicide-resistant weeds.
Historically, Soybeans reached an all time high of 1794.75 in September of 2012. Soybeans - data, forecasts, historical chart - was last updated on June of 2023.
The expected gross profit for this productivity soil is $449/acre for corn and $442/acre for soybeans. Assuming a 50-50 rotation the average gross return would be $446/acre. The net return would be calculated by subtracting out the land rent.
Illinois leads the country in estimated soybean yield with 66 bushels per acre, an increase of 3% compared to 2021 when soybean yield was 64 bushels per acre.
Corn costs more to plant and needs time to take advantage of higher-yielding, long-season hybrids. Soybeans are more forgiving than corn and have a better chance to produce a crop if planted well into June or July.
“A high-yielding soybean crop can remove as much as 84 pounds of potassium on a per acre basis. Compare that to a high-yielding corn crop, which only removes about 55 pounds per acre. In the end, soybeans are still removing a substantial amount of nutrients off that field.”
Legumes like soybeans have the ability to pull nitrogen from the air and store it in nodules on their roots, explaining the reason soybeans are planted the following year after corn. Soybeans are less susceptible to common corn pests and diseases, which can help to reduce pest and disease pressure on corn.
Casteel believes that 130,000 seeds per acre is reasonable in many situations. What he really deals in is plants per acre. He's looking for a minimum of 100,.000 plants per acre when all things are accounted for, and the crop emerges.
Brazil is projected to be the largest producer of soybeans in the world followed by the United States & Argentina. The United States is projected to produce 116.4 million metric tons of soybeans, down 1.89 million metric tons from last month.
Plant seeds from late spring to early summer. Soybeans must have warm soil to germinate and grow. Poke holes into a cultivated bed or row to plant soybean seeds about 2 inches (5 cm) apart and one-half inch (1 cm) deep. Thin to 6 inches (15 cm) apart in all directions.
Once harvested, soybeans have a range of uses. Most farmers grow beans that are sold as animal feed or processed into soybean oil. Soybean oil uses include cooking oil, often sold at retail as "vegetable oil", or used by the food industry in products and on menus.
Prices. Soybean prices are softening. The USDA's forecasts the 2022-23 crop average price at $14.35 per bushel, $0.35 per bushel lower than July's forecast.
Soybean production in 2021 totaled a record 4.44 billion bushels, up 5 percent from 2020. The average yield per acre was estimated at 51.4 bushels, up 0.4 bushel from 2020.
Soybean production in the United States is a significant part of the country's agriculture sector, with several states contributing substantially to the overall output. The leading soybean-producing states include Illinois, Iowa, Minnesota, Indiana, and Ohio.
Demand for U.S. soybeans remained strong through the end of 2022 and that's helped to push prices higher as the new year was just beginning. “Soybeans has been the market that's been able to push (prices) pretty good,” said Randy Martinson, president of Martinson Ag Risk Management, Fargo, N.D.
To facilitate the trading of grain, the USDA created weight standards for each grain so that grain could be weighed to determine the number of bushels rather than trying to make volume measurements. Corn was assigned a bushel weight of 56 pounds, while soybeans and wheat were assigned bushel weights of 60 pounds.
Soybean markets collapse as trade reacts to China's continued rejection of DDGS shipments. SOYBEANS stole the spotlight as last Tuesday's market activity brought a collapse in the soybean and soybean meal markets.
Where are soybeans grown in the United States? US production of soybeans occurs mostly int the midwestern states and is concentrated most in Illinois and Iowa.
The most common way that traders take a position in soybean markets is with a futures contract. Futures contracts enable traders to agree to the delivery of a certain amount of soybeans, soybean oil or soybean meal at a set date in the future for an agreed upon price.
China is the world's largest soybean importer, accounting for nearly 60 percent of global trade and half of U.S. soybean export value. Greater export value is attributable to higher prices.
Soybeans are the world's 42nd most traded product. In 2021, the top exporters of Soybeans were Brazil ($39B), United States ($27.8B), Paraguay ($2.99B), Argentina ($2.53B), and Canada ($2.48B).
US Soybean Price is at a current level of 595.00, down from 614.93 last month and down from 724.09 one year ago. This is a change of -3.24% from last month and -17.83% from one year ago.
Soybean production in the United States is a significant part of the country's agriculture sector, with several states contributing substantially to the overall output. The leading soybean-producing states include Illinois, Iowa, Minnesota, Indiana, and Ohio.
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