Understand soybeans in one sentence

The target of the soybean futures contract on the Dalian Commodity Exchange is yellow soybeans.

01. What is soy?

Soybeans are a legume native to Southeast Asia and introduced to other parts of the world centuries ago. The economic value of soybeans is very high. In addition to being sold, the plants can also improve soil fertility. Soy beans can be eaten and have very high nutritional value. They are one of the few plants that can provide complete protein (contains 8 kinds of amino acids necessary for life). Soybeans generally contain 40% protein, 20% oil, and 30% alcohol.

02. What is soy used for?

Soybeans are an important agricultural product that uses both grain and oil. They can be eaten and used for oil extraction. As a food, soybeans are a high-quality, high-content vegetable protein resource. The protein content of soybeans is 35%-45%, which is 6-7 times higher than cereal crops. Soy products are a traditional side food in East Asian countries. As an oil crop, soybeans are the world's main supplier of vegetable oil and meringue meal. As a by-product of soybean oil extraction, soybean meal is mainly used to supplement protein to feed poultry, pigs, beef, etc., and a small amount is used in the brewing and pharmaceutical industries.

03. What is the soybean industry chain?

There are three types of soybean processing methods: solvent extraction method, continuous pressing method, and water pressure method. After processing, two products are obtained: soybean oil and soybean meal. Each ton of soybean oil produced produces about 4.5 tons of soybean meal.

04. Factors affecting the price of soybeans:

Supply:

Major exporters of soybeans: the United States, Brazil, and Argentina. Factors such as agriculture-related policies, planting environments, and stocks in these countries all have an impact on soybean supply. For example, in the 2018-2019 Sino-US trade war, China's increase in soybean tariffs dealt a certain blow to US farmers growing yellow soybeans, and the amount of soybeans exported and sold by the US declined. Generally speaking, soybeans are planted in spring (India is an exception, sown in summer). They depend on a certain amount of rainfall. If the climate is arid, it is not conducive to the harvest of yellow soybeans. Yellow soybeans began to be planted in April-May, and harvesting began in September. Supply will increase markedly in the third quarter, while production of soybean oil and soybean meal will begin after yellow soybeans are harvested, and there is a certain lag.

Demand: China is the world's largest importer and consumer of soybeans. China's demand for soybeans can easily affect price trends. Usually, the highest demand is one or two months from the beginning of the third quarter.

Effects of alternatives: Corn is the main substitute for yellow soybeans. The growing climate and use of the two have many similarities, and the price also affects each other.

Related products: Soy by-products include soybean oil, soybean meal, soybean oil, and alternatives such as rapeseed oil and sunflower oil. These related products also have a certain correlation with fluctuations in soybean prices.

Political influence: For example, the Russian-Ukrainian conflict has caused global concerns about disruptions in food supply and rising fertilizer costs. Although these two countries are not the main suppliers of yellow soybeans, yellow soybeans are substitutes for other foods, so prices have also risen along with the overall market price.

Exchange rate: The US is the main exporter of soybeans. When the US dollar appreciates, for other countries that import soybeans, the cost of imported soybeans increases, and the price of soybeans is likely to decline. The opposite is also true.

05. Why pay attention to soybeans?

In recent years, with the rapid development of China's oil pressing industry, soybeans used for oil extraction have become the mainstream variety in China's soybean market. Their production, circulation and processing are all on a considerable scale, forming a complete industrial chain. As basic commodities relating to the national economy and people's livelihood, agricultural products have always been the focus of national policy attention. Recently, the purchase and sale of soybeans has slowed down, and spot prices have been running smoothly. Most of the market has a wait-and-see attitude, awaiting new policy guidelines. Spring ploughing and spring planting work is still ongoing in the Tohoku region. Recently, there is a rumor that the State Reserve or local provincial reserves will re-enter the market for takeover. If this rumor is fulfilled in the future, it may bring certain benefits to the soybean market.