Market Overview: Soybeans (S)

Soybean Futures are traded on the Chicago Board of Trade. Soybeans are grown primarily for beans, which are harvested into oil and meal. Soybeans are primarily grown in the Corn-Belt states and the lower Mississippi Valley. The three top producing states on average are Iowa, Illinois, and Minnesota.

Soybeans are processed, "crushed", into meal and oil. Soybean Meal is used primarily as an animal feed, while soybean oil is found in a plethora of foods we eat and also has a host of industrial uses, with the most common food uses being edible oils- margarine, salad dressing, etc. Typically, each bushel of Soybeans produces 11 pounds of Soybean Oil and 48 pounds of Soybean Meal.

Seasonal Overview:

Tax selling of last year’s crop has tended to weigh on prices at the beginning of the year, culminating in one of the best known seasonal tendencies in the grain markets, the "February Break". In recent years the February Break has tended to occur in late January and early February. During the production cycle of the Soybean crop, the predominant feature is fear that the crop will be damaged, thus reducing yields. An old grain traders saying is “ Grain Crops are killed 3 times a year”

• Once during the spring when it is too hot/cold/wet/dry for planting or for the crop to emerge.
• Once during the summer on fear of too little rainfall for pollination. (This is the potentially explosive rally in the summer).
• Once during the autumn on early frost or harvest delays.

After each of these potential crop-destroying events, prices tend to break as worries grow about the coming supply. It is normally the break from these lofty, panic-inspired levels that the trading opportunity lies.



Soybeans: (High: May-Jun//Low: Oct) After a post-harvest rally into the new year, soybeans are pressured by tax-related producer selling and the maturing Brazilian crop into the notorious "February Break." With market attention turning to the new US crop by March 1, spring rally often continues into May/June planting. By summer solstice, market begins decline -- sometimes broken by July weather scare -- into crop maturity and October harvest. Post-harvest rally begins by November's First Notice Day. It is normally the break from these lofty panic inspired levels that the trading opportunity lies.

Chart courtesy of Moore Research Center, Inc.