The soybean is an oilseed, which is becoming increasingly popular as an ingredient for vegetable oils and a source of protein in animal feed. The soybean originated from China, but the United States are currently the largest producing nation. India and China are however increasing their production capabilities and will most likely take over the leading position. The negative effect of this increasing soybean production is the deforestation of the rainforest in order to accommodate extra farming grounds.
History of soybeans
The soy plant has been an important type of plant food in Asia dating back to around the 11th century B.C. The Chinese have long been very protective of their soy production and the soy plant would spread very slowly across the world. During the 16th century the soy plant has spread across the Asian continent. The soybean made it appearance to Europe and the Americas in the following centuries, but remained a rarity for a long period. The soy plant would only gain real interest and impact in Europe and the Americas at the start of the 20th century. The benefits of the soybean became more well-known and therefore the import rose rapidly, eventually leading to European and American countries starting their own soy production. Production methods, major producing nations and applications of soybeans have changed considerably over time, due to research and requirements.
Production
The current leading producers of soybeans are the United States, China, Brazil, Argentina and India. The United States are slowly losing their leading position due to the low labor costs in competing countries and the available soil in these countries. Soybeans are commonly planted in rotation with another crop, for example corn. This maximizes the efficiency of the field by producing crop throughout the year. The production process is comprised of a number of steps.
Planting
The best time to start planting soy plants is usually around May. There are however factors that need to be taken into consideration before actual planting the seeds and may influence the best moment for planting. The temperature of the soil is critical as it will affect the growth and quality of the new plant.
The most common and effective method for planting the seeds is called “no-till”. The seeds are then planted very soon after harvesting the previous crop (wheat or corn). This preserves the moisture of the field as well as decreases the chance for erosion. This method is also far more efficient as one machine can plant many rows of seeds at the same time.
Harvesting
After the seeds are planted, they need to mature which takes about six months. The soybeans are ready to be harvested, when the leaves start turning brown and fall from the plant. This exposes the mature pods, which hold the pods with the soybeans. The most common harvesting method is straight combining. A combine will cross the field of ripe plants where it will cut the plants. Inside the combine, the beans are separated from the stem and pods and collected in a holding tank. This holding tank will be emptied into a grain truck. The soybeans will either be taken directly to a processing facility or be stored until they are ready to be sold.
Processing
The first step in processing the soybeans is the cleaning and drying of the beans. Hereafter the beans are de-hulled as the hull may absorb some of the oil upon extraction. The final step before the extraction of oil, is the heating of the bean. This will coagulate the soy proteins and makes the extraction much easier.
Applications
The soybean has been used for various purposes throughout history. The earliest records indicate that China produced soybeans solely for their seeds, which formed an important part of their diet. These seeds soon became a major part of oriental diets of many other Asian countries. In the United States, soy was first mainly used as a forage and as a form of manure.
During the start of the 20th century the benefits of soy as a food became well-known and consequently became a popular ingredient in many types of food and in different states. Currently soybeans are most commonly used in the production of either soy oil or soy meal.
Soybean Oil
Soybean oil is the most common type of vegetable oil being used in food production. The natural taste and strong odor support makes it ideal in food production. These features enable soybean oil to be combined with various other vegetable oils and enhance these oils. These combinations are a favorable ingredient in salad dressings and sauces. These products maintain the flavor of high quality oils such as olive oil, but the greater part of the dressing or sauce will be made up of soybean oil. It’s natural taste will however not influence the final flavor and is therefore a highly favored filling oil. Soybean oil is also commonly used in the production of potato chips and various snacks because of its good emulsifying ability. With the increasing environmental awareness, biofuels are gaining more interest. Soybean oil is the most common input for producing biofuels in the United States, accounting for ninety percent of all input.
Soybean meal
Extracting the oil from the soybean produces a soybean meal which is highly favored in the production of animal feeds due to its high concentration of protein. Soybean meal is very effective as a source of energy and is easily digestible for animals, especially poultry and swine. Dairy cattle are fed a specialized form of soybean meal, which helps increase the digestion of the cow and enhances milk production.
Besides functioning as a supplement in cattle feed, soybean meal is also used in the production of soy flour and soy protein concentrates. It is also gaining increased interest as a fertilizer, mostly used in organic gardening thanks to the high concentration of Nitrogen and Phosphorus.
Trading of soybeans
Soybean futures trading takes place on the Chicago Board of Trade (CBOT) and on the Tokyo Grain Exchange (TGE). On these exchanges producers and manufacturers can purchase futures and options in order to protect themselves against adverse price movements. The pricing of soybean futures in Chicago serves as a benchmark for global prices. These may however vary from the benchmark price due to specific local conditions.
Price factors
The prices of soybeans has been rapidly increasing over the last few years. The rising price of soybeans are caused by a number of factors:
As with other agricultural commodities, the weather can have a major impact on the price of soybeans. Adverse weather conditions can greatly reduce the yield of soybeans. Weather has such an impact on the price because it cannot be controlled and is still not fully predictable, despite al technological advancements.
The price evolution of soybeans is being influenced by other agricultural commodities, most notably corn. Farmers usually divide their available land between corn and soy and with rising corn prices, farmers will plant more corn as it will generate more profit. This decreases the available land for soy and consequently the price of soil will rise as a result the limited supply.
The rising demand for biofuels is an important factor in the pricing of soybeans as it is a leading component in its production process. The number of uses for soybeans is continuing to increase thanks to scientific and technological advancements, which consequently raises the demand and price for soybeans.
Future contracts
Below are listed the specifications of a single Soybeans Futures Contract.
| Product Symbol | ZS |
| Contract Size | 5,000 bushels |
| Contract Months | January, March, May, July, August, September & November |
| Price Quote | Cents per bushel |
| Tick Size | 1/4 of one cent per bushel ($12.50 per contract) |
