What Market Fundamentals Can Affect The Soybean Futures?
Together the Unites States and Brazil dominate global soybean production. The Chicago Board of Trade has separate futures contracts for US and Brazilian soybeans. In this article we will be focusing on the US soybean futures contract, and US soybean production.
The soybeans market follows a fixed cycle of production. The soybean cycle goes from planting, to podding, to harvest. During these key stages of the crop's development the soybeans futures prices are very sensitive to any potential supply disruption.
1. Soybean Planting Soybean field preparation and planting typically lasts from mid March through May. During March and May in the early stages of the planting effort soybean futures prices have tended to increase.
2. Soybean Podding Soybeans begin to set pods or reproduce in August. During the month of August soybeans futures have tended to increase. However, since even a poor pollination ensures some future soybean production the market doesn’t tend to increase as much during podding as it does doing planting.
3. Soybean Harvest Soybeans are typically harvested in October and November. Soybean futures have tended to go up slightly during harvest. However, harvest delays, or at least the fear of such, can cause futures prices to spike.
4. Soybean Diseases Soybean Diseases can dramatically reduce yields and the quality of soybeans. Soybean diseases can increase production costs and have negative effects on marketing and cropping decisions. The most threatening soybean disease is Asian rust.
Asian soybean rust is a harmful fungal disease. The rust spores, once windborne, can spread rapidly and have been known to infect an entire region the same year the disease is first detected. Asian rust has reduced soybean yields by 10% to 80% in infected areas. The disease’s rapid transmission rate coupled with an abundance of host species suggests that eradication would be unlikely once the fungus is established in the United States.
5. China China is the leading importer of Soybeans in world. Since 1995 Chinese soybean imports have increased by 2,700%. If Chinese demand continues at current rates it will soon import over 50% of the world’s soybeans.
6. USDA Crop Reports The USDA publishes several key crop reports that are helpful in your research and trading of soybean futures and soybean options. The USDA Prospective Plantings Report is the first main report at the beginning of the soybean growing season. It is released around the end of March. The report summarizes how much and which crops the farmers expect to plant for the upcoming season. The USDA Monthly Crop Production Report is released around the 10th of each month. The report gives an updated estimate of supply and demand for soybeans. The USDA Grain Stocks Report provides information on the current supply of soybeans and other grains in the U.S. and the world.
These are just some of the basic fundamentals to keep in mind when you are considering a trade in the corn market. Before opening up a commodity account to trade corn you should consult with a licensed commodity broker that follows the corn market to discuss investment strategies.