Compare Brokers For Trading Soy

Looking for brokers for trading soy? We have compared 12 broker accounts (out of 147) that are suitable for you below.

We found 12 broker accounts (out of 147) that are suitable for Soy.

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Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.

The Ultimate Guide to

Commodity Trading: Soybean Futures

What are Soybeans?

Soybeans are an agricultural crop grown for their edible bean. Sometimes known as soya bean, soybeans are a type of legume originating from East Africa. They are able to grow in a variety of soil types and in a wide range of climates. Soybeans require less energy to grow and produce fewer greenhouse gases than many other crops – which makes them better for the environment.

Most beans are classed as pulses, however soybeans are classified as oilseeds as they are rich in oil, at around 18%. Like pulses though, their seeds grow in pods. Soybeans are also rich in protein, making up around 35% of their composition, so soybeans are often divided into their component parts – soybean oil and soybean meal – which are then put to different uses.

Soybean Uses

The bean has numerous uses in today’s society. The oil is one of the main products extracted from soybeans, as it can be used for cooking and dressing salads etc. The protein is used to make tofu, cheese, and other products for consumption. The actual bean itself can be eaten fresh as edamame, which are premature soybeans that are cooked and served in, or are fresh from, the pod.

Soybeans are one of the top animal feed sources. Soybean meal can be used as a food supplement, but the vast majority is used for animal feed, primarily because of its high concentration of protein.

Modern Statistics for Soybeans

The United States has been the biggest producer of soybeans since its introduction into the US in 1765 by Samuel Bowen, a former sailor with the East India Company.

Countries with Largest Soybean Production 2014 (WorldAtlas)

Country – Million Metric Tonnes

USA – 108.0

Brazil – 86.8

Argentina – 53.4

China – 12.2

India – 10.5

Paraguay – 10.0

Canada – 6.0

The global production of soybean oil in 2015/16 was 52 million metric tons (statista).

What Influences the Soybean Market?

There are numerous influencing factors:

  • The supply and demand for the two main products – soybean and soymeal – are related. In order to hedge against the effect of market forces, a strategy used by soybean traders is to purchase a contract of soybeans, and then sell a contract of soybean meal and soybean oil. This is known as a crush spread, named after the industry to separate the components – the crushing industry.

  • Soybeans were one of the first crops to be genetically modified, however this can be a controversial issue. If public opinion turns against GM products, then this could have a significant impact on soybean markets.

  • Environment groups in Brazil are in opposition with the soybean industry about its impact on the Amazon Rainforest. This could lead to a dramatic effect on the price of soybean.

  • Corn impacts the price of soybeans as they compete in the cooking industry.

How is Soybean Traded?

Soybeans can also be traded by commodity traders. Exposure can be gained using soybean futures, which are available from the Chicago Mercantile Exchange (CME), with contract months of January, March, May, July, August, September and November. CME contract sizes are 5,000 bushels (136 metric tons) and carry a ticker symbol of ZS on CME Globex (electronic trading).

Soybean oil futures are also available from CME, with a contract size of 60,000 pounds, and soybean meal futures are available with a contract size of 100 tons. These are all physically delivered futures, which means that the contract is settled on a future delivery date at an agreed price.

Soybean futures are also available on Japanese, Indian and Argentinian exchanges.

A more convenient way to trade soybeans is using Exchange Traded Funds (ETFs). There are various agricultural ETFs that offer a limited exposure to the soybean market, however the Teucrium Soybean Fund (SOYB) is purely based on the soybeans market.

Soybeans - Plus500 CFD

Soybeans – Plus500 CFD

Traders also may opt for contracts for difference (CFDs) in order to speculate on the future price of soybeans. These contracts allow traders to take a view on whether the price of the underlying CME futures contract will increase or decrease, and therefore buy or go short on contracts, respectively. Various regulated brokers offer easy to access and easy to use online platforms through which these contracts can be accessed. One example is Plus500, which allows a minimum trade of 4,000 bushels on their CFD, with a leverage of 1:152, and a spread of 0.93. This means at the buy price of 922.47, the minimum margin required would be $247.20 (or £191.22) and this would expose the trader to $37,474 (or 28,974) of the stock. (Prices taken from Plus500 30/08/2017.) It should be noted that this increased exposure due to leverage can also go against the trader, leading to further capital depletion, although most regulated brokers offer negative balance protection.

Conclusion

Trading soybeans can be popular, however it can also be subject to extreme price fluctuations making it a volatile market to trade on. It is important therefore to understand the risks involved and to always choose a regulated broker to obtain reassurance that they are subject to stringent regulations when dealing with their clients.

Between 54-87% of retail CFD accounts lose money. Based on 69 brokers who display this data.