Soybean, a type of legume with multiple uses native to East Asia, belongs to the group of soft commodities that are grown rather than extracted or mined. With a global market size expected to grow at a Compound Annual Growth Rate (CAGR) of 3.48% from 2020 to 2027, trading soybeans has become popular, particularly with futures traders. As a result, many of the top brokers and platforms offer soybean assets.
In this soybean trading guide, we explore the dominant tendencies in the commodity investing business, list major producers, exporters and importers, and explain the segments of the soybean market. We also explain how to start trading soybeans, from strategies and today’s prices to the best soybean brokers in 2024.
Top Soybean Trading Brokers
Soybean Trading Basics
According to the Chicago Mercantile Exchange (CME) Group, the global soybean market reached a consumption volume of 367 million metric tons in 2021. Consumption is expected to grow at a CAGR of 1.3% in the next five years and attain a volume of 396 million metric tons by 2027.
There are three inter-connected reasons behind the popularity of soybean trade:
Importance & Uses
Containing a significant amount of phytic acid, B vitamins and dietary minerals, soybean is a source of protein for millions of people worldwide as well as for livestock feed. It is a substitute for meat and a source of oil.
As an ingredient, it is also used in the production of various chemical products such as rubbers, fibers, plastics, coatings, solvents, lubricants, and adhesives.
This widespread use means plenty of opportunities for traders to speculate on the merits and drawbacks of respective industries through soybean brokers.
The need for alternative food sources will increase worldwide in the near future, with the world’s population expected to rise to 10 billion by 2050. As a consequence, the demand for soybeans will likely continue to grow and will be further fueled by changes in consumption patterns as more and more people opt for healthier and plant-based diets. This also means soybean brokers provide retail investors with a way to speculate on the rising trend towards plant-based diets.
Most of the demand for soybeans comes from emerging markets, primarily driven by the fact that the commodity is a natural alternative for proteins at a lower price.
Asia Pacific and Latin America countries are expected to have a 78.1% share in the soybean trade by the end of 2025. Meanwhile, the US Soybean Export Council (USSEC) in recent years has set its eyes on Sub-Saharan Africa as a region that demonstrates the valuable potential for the soybean trading market.
Soybean Trading Products
In terms of end-use, soybeans, soybean oil and soybean meal are the three main types of soybean products available to trade on the commodities market.
Whole soybeans can be consumed in many forms like soybean sprouts, toasted soy protein flours, soy milk, and tofu or as fermented products like miso, soybean paste and soy sauce. Soybean oil is one of the most commonly used cooking oils, in addition to being used for making caulks, resins, animal feed, and biodiesel, while soybean meal is the number-one protein source used to feed poultry and livestock.
Importantly though, most retail soybean brokers offer straightforward derivatives, such as CFDs and futures, on the soft commodity, meaning investors do not need to take charge of large quantities of soybeans. We explain how these instruments (plus others) work further below.
Major Soybean Producers, Exporters & Importers
The history of soybean trading starts with the domestication of the plant in China around the 11th century BC. The soybean seed was first introduced to the British Colony of Georgia in 1765 and its popularity among farmers grew in the late 1800s as they started producing it for their livestock. At the beginning of the 20th century, the nutritional value of trading soybeans began to be explored, while Henry Ford initiated the industrial use of soybean.
Starting from the 1950s, the United States dominated the global soybean market with a production volume that reached 120.52 million metric tons in 2018/2019, but Brazil overtook in 2020 with a production volume of some 138 million metric tons in 2020/21. Argentina, China, India, Paraguay and Canada are the other largest producers of soybeans.
Brazil, the United States, Paraguay, Argentina and Canada are the top five exporters of soybeans, generating 95.2% of global revenues in 2021, during which the value of globally exported soybeans increased by 22.2%.
China creates the biggest source of soybean demand in the world, followed by the United States. China imports 60 percent of its soybean to meet the demand, but plans to reduce its dependency on imports by shifting from corn production to soybean production. The European Union, Mexico, Egypt, and Argentina are other major importers of soybeans.
Understanding the major players in the importation, exportation and production of soybeans can help retail traders focus their strategies and market research. For example, a fall in the production of soybeans in the US alongside a rising demand in China may lead to a supply squeeze, driving up the price of soybeans.
What Moves The Price Of Soybeans?
Like other agricultural products, the weather has a significant effect on the volume of soybean production. Adverse weather conditions can disrupt production and boost soybean trading prices.
As an example, bad weather conditions in Brazil, coupled with the war in Ukraine, drove soybean trading prices to record highs in mid-2022.
Value Of The US Dollar
As long as the United States remains one of the largest soybean producers in the world, the price of the commodity will continue to be quoted in US dollars per bushel.
Historical records show an inverse relationship between the value of the dollar and commodities prices, meaning that the price of trading soybeans is likely to rise when the US dollar weakens against other currencies.
Prices Of Other Grains
The price of trading soybeans is highly correlated with other grain crops, particularly with the price of corn. For farmers, corn and soybean are alternative produces and they favor one crop over the other by monitoring the two commodities’ price ratios.
As the world’s top buyer of soybeans, China is the primary driver of soybean prices. Increased demand from China, with global supply remaining around the same levels, means a rise in soybean trading prices. Emerging markets like India and South Africa with large populations and growing demand for soybeans can also affect trading prices.
Tip: soybean brokers that offer data and information on consumption reports in China could be worth looking at.
Protectionist trade policies can lead to fluctuations in the price of trading soybeans. During the 2018 trade war between the United States and China, increased Chinese tariffs on American goods led to a significant decrease in the price of US soybeans.
The seasonal tendencies of soybean production and trade inevitably affect prices; prices tend to fall during harvest seasons and rise during planting seasons.
In the case of trading soybeans, the changes in global prices are triggered by the seasonal cycles of two major producers: Brazil where soybeans are harvested in May-June and the United States where newly harvested soybeans come to the market in November-December.
How To Trade Soybeans
A soybeans futures contract is a liquid tool for traders that provides an efficient hedge against unexpected market events, price volatilities and supply and demand fluctuations.
Like other futures contracts, it is a legal agreement to buy or sell a predetermined amount of a commodity at a specific price on a specific date in the future. Future contracts for soybeans, soybean oil and soybean meal are offered on the CME and can be traded anywhere in the world through the Globex electronic system and also through the network of exchanges and clearing chambers for financial and commodity markets (Intercontinental Exchange – ICE). Soybean futures can also be traded on the Tokyo Grain Exchange (TGE).
Importantly, all futures contracts, soybean, soybean oil and soybean meal futures are traded through standardized contracts. Each futures contract specifies the contract size, which is the quantity of the product delivered for a single contract, and a minimum price fluctuation, also known as a tick, which is the smallest increment of price movement possible in trading a given contract.
All soybeans futures contracts require traders to put up an initial margin, the amount of money a trader must place in an account to open a futures position, and a maintenance margin, the amount the trader must keep in the account due to changes in the price of the contract.
|Minimum Price Fluctuation
|1/4 cent per bushel ($12.50 per contract)
|0.01 points ($6.00 per contract)
|10 cents per ton ($10.00 per contract)
|100 tons (2,000 pounds per ton)
|Jan, Mar, May, Jul, Aug, Sep, Nov
|Jan, Mar, May, Jul, Aug, Sep, Oct, Dec
|Jan, Mar, May, Jul, Aug, Sep, Oct, Dec
|CME Globex Trading Hours
|Sunday – Friday 7:00 p.m. – 7:45 a.m. CT and Monday – Friday 8:30 a.m. – 1:20 p.m. CT
|Sunday – Friday: 7:00 p.m. – 7:45 a.m. CT and Monday – Friday: 8:30 a.m. – 1:20 p.m. CT
|Sunday – Friday, 7:00 p.m. – 7:45 a.m. CT and Monday – Friday, 8:30 a.m. – 1:20 p.m. CT
A soybean options contract gives a party the right to buy (call option) or sell (put option) an asset at a set price on a set expiry date. Compared to futures contracts, options contracts gives traders the ability to prevent or limit potential losses.
Soybean options contracts are offered for trading at CME and Tokyo Grain Exchange (TGE).
Contracts For Difference
Contracts for difference (CFDs) are a popular vehicle for retail traders seeking to take advantage of changes in soybean prices. A CFD is a type of derivative in which a buyer agrees to pay the difference between the current value of an asset and its value at the contract expiry. CFDs are popular among traders as the derivative gives them the ability to easily go short as well as to go long.
Many of the top soybean brokers and platforms offer leveraged CFDs.
Spread betting is a derivative product which allows you to place a bet on the future price of an asset without taking physical ownership of the asset itself. In spread betting, the accuracy of your prediction determines your profits or losses. There are three popular spread betting strategies used in soybean trading…
Grain Spread is an inter-market spread that involves simultaneously buying and selling two different, but related, grain futures within the same contract month. For example, the Soybean-Corn spread is a tool for trading on the relationship between corn and soybean futures prices.
Crush Spread is an inter-commodity spread allowing traders to hedge the margin between soybean futures and soybean oil and meal futures. This three-leg options strategy is based on the idea that the prices of raw soybean and its byproducts adjust over time. Crush spread means taking a long position in soybean futures against short positions in soybean meal and soybean oil futures, while the traders can also choose the Reverse Crush Spread which involves selling raw soybeans and buying soybean oil and soymeal contracts.
How To Compare Soybean Brokers
Consider the following features when choosing between brokers that offer soybean trading:
Deciding how to trade soybeans via an online brokerage is an important consideration. Buying and selling commodity-based futures contracts is a particularly popular way of trading softs like soybeans.
Spreads and commissions can have a big impact to your overall trading profit when trading soybeans.
The best soybean brokers will have a transparent pricing structure with clear trading and non-trading fees. E*Trade, for example, offers commission-free investing on ETFs and options, while soybean futures contracts have a charge of $1.50 per contract.
As well as trading fees, look out for soybean brokers with a low minimum deposit requirement and free deposits and withdrawals.
Platforms & Tools
There is no right or wrong trading platform when it comes to soybean trading, it often comes down to personal preference. Nonetheless, having the choice between third-party terminals or proprietary tools is worth looking out for. It is important to have access to historical price data to understand the previous few years supply and demand of the crop.
The MetaTrader 4 platform, for example, hosts various price data sets with the ability to analyze via customizable charts and graphs. Additionally, having access to tools such as technical indicators is important. This may include moving averages (MA) and the relative strength index (RSI) to determine current trends and momentum in the commodity markets.
As with trading all assets, you should always research whether your chosen soybean brokerage is licensed to operate with a top-tier authority. Consumer protection and access to compensation schemes may vary. For example in the US, the Commodity Exchange Act requires certain firms, including online brokers, to be registered with the CFTC.
You can verify regulatory oversight by visiting the official websites of the respective financial watchdog and running a search on a brokerage’s license number.
Pros Of Trading Soybeans
Benefits of trading soybeans include:
- High liquidity
- Expected increases in global demand
- Less room for price manipulations
- Long list of soybean brokers and platforms
- Multiple charts and graphs at the best soybean brokers
Cons Of Trading Soybeans
Downsides of trading soybeans include:
- It is a useful proxy for trade wars
- Trading limits may hinder some strategies
- Strong relation with the value of the US dollar
- Weather conditions can create major swings in supply
- Demand sensitive to the prices of other grains and meat
Final Word On Trading Soybeans
Due to the high nutritional value of soybeans with a relatively lower price and a wide range of potential uses, the outlook for the soybean market is quite optimistic given the rising world population. On the other hand, the climate crisis and global trade wars may pose threats, as they can make the price of the commodity highly volatile.
The soybean trading market offers high liquidity and a selection of financial instruments that can allow day traders to generate profits as long as they invest time to learn the cyclical pattern of soybean production and the associated price changes.
Use our list of the best soybean brokers to start trading today.
Who Are The Frontrunners In The Soybean Market?
The Allied Market Research in a recent report lists Kerry Inc., Fuji Oil Group, House Foods Group Inc, The WhiteWave Foods Company, E.I. du Pont de Nemours & Co., CHS Inc., and Cargill Inc. as frontrunners in the soybean market. Those looking to start trading soybeans should keep an eye out for insights and announcements that relate to the strategies of these companies.
Which Reports Should Be Considered When Trading Soybeans?
The grains stocks reports published by the United States Department of Agriculture (USDA) four times a year, should be followed by anyone in the soybean trading market. Traders should also keep an eye on USDA’s monthly World Agricultural Supply and Demand Estimate (WASDE) Report and its Prospective Plantings Report based on surveys with farmers.
Where Do I Look To Track The Soybean Trading Market?
You can follow the Dow Jones Commodity Index Soybeans and NASDAQ Commodity Soybean Index. If you wonder what is the price of soybeans per bushel today, check the soybeans spot price chart and the US soybeans future chart.
Where Should I Look For Soybeans Futures Trading Hours?
Soybeans futures trading hours are set by the CME Group and traders in other parts of the world should take into account differences in daylight savings times when calculating trading hours for their time zone.
What Is The Teucrium Soybean Fund?
Teucrium Soybean Fund (SOYB) is an agricultural exchange-traded fund (ETF) which is based on soybeans and tracks an index of soybean futures contracts. Several of the top soybean brokers offer this ETF.