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Sep 23 / Roson

The Road Ahead with soybeans futures and others

I will continue with the soybeans futures market and get to learn more about it.  I also need more information to support my judgement calls besides weather.


First of all, since, as a raw material, soybean is the primary source of biodiesel in the united states [1].  It is important to look at the biodiesel market. What happens in the biodiesel market (e.g. supply & demand of biodisesel,  policy on boidisel, etc) would cause direct or indirect  impacts on the soybeans futures market.  Secondly, I could study the close substitutes to soybeans for human consumption (e.g. other beans or legumes that are high in proteins,etc.) and for the production of bio fuels (e.g. canola, corn). Change in one market might affect the other market due to the substitution effects.  Lastly, I should study the matter related to the storage of soybeans.  The quantity and quality of soybeans are being stocked up by the producers over the seasons would make a difference on the soybeans futures market too.


On the other hand, the price of soybeans futures appear to have a upward trend over the months of May to August this year due to the drought. For example, the graph below shows that the price of soybeans Jan 2013 contracts is gnerally going upward from May to August. This upward trend reflects the expectation of the tightened soybeans supply as the drought continues.  However, it also appears that the price trend has turned to go downwards since the beginning of September. Is it to do with the harvest that the harvest is better than expected?  I should pay attention to this and see what is happening.


Soybeans Futures Jan 13 (May-Sep, 2012)

Price chart of soybeans futures
Jan 13 contracts from May to Sept. 2012
Source: CME Group, Agriculture Products, Soybeans Futures [2]

I could start looking at the corn or wheat futures market if time allows.


1. Wikipedia. (2012, Sept.). Soybean. Retrieved from

2. CME Group. (2012, Sept.21). Soybeans. Retrieved from


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  1. gulsana / Sep 23 2012

    Hi Roson,
    Well, I am impressed by your blog. It is very well organized, and your thoughts are very clear.
    I see you are going to prepare more for the next week.
    I like your idea checking the usage of soybeans in other markets as a raw material. You are right; the market of biodiesel may have impact on prices in case an increase of demand from that side of the market. Furthermore, from my experience I have to say that I did make a mistake not looking at countries reserves. You are paying right attention on that. I thought that because of globally tight supply of soybeans and significant demand from China there would be a price increase in CBOT; however, I did not take into account government’s reserves, so as a result I encountered with substantial loss.
    I also recommend you to check a global supply and demand for soybeans. The South America is one of main producers of soybeans, and planting season is basically October and November, so there will be news on that. It is expected if the weather in that part of the world is as expected, there will be a sufficient supply of soybeans to replenish shortage; however, there is fear that the likelihood of the dry weather can cause the negative outcome.
    And, from my point of view that I am making some predictions that USA is the main exporter of soybeans, even though it had an improvement of harvest in September, it had dealt with an extreme drought that the outcome of that was substantial for USA. What I want to say that corn production is significantly low in this year and it is used for animal feed industry, so because of relatively close substitution of corn and soybeans as a livestock feed, there might be an increase of demand and the shortage of export by USA.
    In addition to these, as you said we have to follow USDA’a report on USA’s harvest because, even though, the late rain did improve harvest, overall the severe drought did its job, so the late harvest may not be sufficient to fill the shortage.
    Internet sources:

  2. Roson / Sep 24 2012

    Thanks Gulsana for your comment and suggestions. You are right. That little rainfall at the beginning of the week didn’t change much to what the drought has already done and continued to. It’s the harvest season for soybeans, and corns, and soon for wheat. The daily news would provide good information for any price volatility even though we supposed an increase of price due to expected future shortage… of course, there’s much more to learn down the road. It’s been fun and exciting so far. =]

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