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What Moves Soybeans Futures Price?

soybean price study

Soybeans and soy products have become increasingly popular over the past twenty years, introducing volatility in soybeans futures price.

Owing to soybeans’ newly discovered health benefits— on one episode of Denise Austin’s “Light ‘n’ Fit” workout show, these benefits were flashed onto the TV screen throughout.

I drink chocolate soy milk whenever I can, and my father often makes banana soy shakes. And the use of these beans is not even confined to human food— farmers feed them to their animals, and many companies use fuel made from them.

Soybeans have also been “genetically modified” for even more and varied uses— the herbicide Roundup is one such product.

Daily Soybeans Prices (CBOT)

Soybeans Futures Price

But there is one large problem associated with soybeans, and that is their constantly fluctuating price, which can be determined by a number of factors, some of which will be discussed below.

Soybeans Producing Countries

The soybean was cultivated in China for thousands of years before the advent of writing. During the Great Age of Exploration, they spread to other parts of the world. Today, the United States is the world’s leading producer of soybeans, producing about 35 percent of the world’s total crop.

The next four largest are Brazil, Argentina, China, and India— these countries and America together yield over 90% of that total.

Factors Affecting Soybeans Futures Price

Since 2008, the price of soybeans has gone up by at least 200 percent, owing to a duo of factors— decreasing production on the one hand, and the increasing number of uses for these commodities. A disease that has been given the name soybean rust has also been spreading all over the United States; it is believed the wind-borne fungus that causes the disease was blown in here from Venezuela by Hurricane Ivan in 2004.

As of now, there is no definite solution to the problem of combating this disease.

A small number of companies has dominated the huge soybean industry. One of these, the Cargill Cartel, has attributed its large number of profits to decreasing costs of the beans.

soybeans point and figure chart

Historical Top and Bottom Soybeans Futures Price

An article appeared in Business Week on January 12, 2011 stating that the prices of corns and soybeans were at their highest since July 2008. According to their report, this happened because bad weather was adversely affecting those crops, and demand for them was also increasing even as the supply was decreasing.

The soybeans futures price increased by 40 percent.

And in the Wall Street Journal some time later (March 30), Morgan Stanley stated that it foresaw even higher prices for the crop in the months ahead. The company even believes that “corn and soybean prices need to jump even more— they recently hit two-and-a-half-year highs— to entice farmers to plant more.

In July 2008, CBOT (Chicago Board of Trade) soybeans futures price went down by as much as $14.465 per bushel, according to a report by USA Today. More than two years later, in November 2010, the soybeans futures price went up by 25¢ to $9.815 a bushel (Newsweek).

The price of soybeans will probably continue to increase as more effective ways are discovered of producing them and extracting the oil from them, and as the demand for products made from soy increases. But there will surely also be ways of increasing production to the point where the supply can keep up with and even surpass the demand— and thus cause the soybeans price to go down again.

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