Soybeans
Trading soybeans is a way to speculate on rising demand, hedge against inflation and a declining US Dollar, and diversify investment portfolios. Soybeans are used in a range of industries including food, biofuels and plastics. This tutorial unpacks the basics of soybean trading, from the top brokers to the factors that influence price forecasts.
Best Soybean Brokers UK
-
Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for traders at all levels.
-
Founded in 2002 in Poland, XTB now serves more than 1 million clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring traders.
-
Established in 1989, CMC Markets is a respected broker listed on the London Stock Exchange and authorized by several tier-one regulators, including the FCA, ASIC and CIRO. More than 1 million traders from around the world have signed up with the multi-award winning brokerage.
-
IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.
-
RoboForex is an online broker, established in 2009 and registered with the IFSC in Belize. Traders can choose from five accounts (Prime, ECN, R StocksTrader, ProCent, Pro) catering to different needs with trades from 0.01 lots and spreads from 0 pips. RoboForex has also enhanced its offering over the years, adding CFD instruments and launching its stock trading platform, plus the CopyFX system.
-
Established in 2006, FxPro has emerged as a trusted non-dealing desk (NDD) broker offering trading on over 2,100 markets to more than 2 million clients worldwide. It has scooped over 100 industry awards and counting for its competitive conditions for active traders.
-
Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.
-
Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
-
Fusion Markets is an online broker established in 2017 and regulated by the ASIC, VFSC and FSA. It is best known for its low-cost forex and CFD trading, although its multiple account types and copy trading solutions cater to a range of traders. New clients can sign up and start trading in 3 easy steps.
-
Established in 2001, easyMarkets has made for a name for itself as a trusted, fixed spread broker. Improvements to its tools over the years, from adding the MetaTrader suite and TradingView to enhancing its exclusive risk management tools like dealCancellation, mark it out from the competition.
-
Established in 2008 and headquartered in Israel, Plus500 is a prominent brokerage that boasts over 25 million registered traders in over 50 countries. Specializing in CFD trading, the company offers an intuitive, proprietary platform and mobile app. It maintains competitive spreads and does not charge commissions or deposit or withdrawal fees. Plus500 also continues to shine as one of the most trusted brokers with licenses from reputable regulators, including the FCA, ASIC and CySEC.
-
Established in 1983 and now a part of the Nasdaq-listed StoneX Group, City Index is a renowned and award-winning broker specializing in forex, CFDs, and spread betting. Offering over 13,500 instruments, an evolving Web Trader platform, top-tier educational resources, and 24/5 customer support, City Index delivers a comprehensive trading experience.
-
Markets.com is a respected broker, offering multi-asset trading opportunities through CFDs or spread betting (UK only). Established in 2008, the brand has an impressive 4.3 million registered customers and is overseen by trusted regulators, including the FCA, ASIC and CySEC. 79.1% of retail accounts lose money.
-
Interactive Brokers (IBKR) is a premier brokerage, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
-
Amega is an offshore STP broker offering CFD trading fon forex, stocks, indices and commodities with very high leverage up to 1:1000 and a zero-commission pricing structure. Traders access markets through the MT5 platform and can test the broker's services through a demo account.
-
Grand Capital is a MetaTrader broker with welcome bonuses, trading competitions and an intuitive copy trading service. Several account types and 400+ assets provide trading opportunities for various types of investors and strategies. New users can also open an account and start trading in a matter of minutes.
-
IronFX is a multi-regulated forex and CFD broker founded in 2010. This award-winning firm offers 500+ markets to over 1.5 million clients across 180 countries. Traders can access various account types with competitive pricing on the MT4 platform, as well as 24/5 customer support in 30 languages.
-
Ingot Brokers is a multi-regulated brokerage established in 2006. The broker offers CFD trading opportunities on 1000+ instruments including forex, stocks, indices, commodities and cryptocurrencies. The broker supports the MetaTrader 4 and MetaTrader 5 platforms and offers both raw spreads and commission-free account options.
-
InstaForex is a forex and CFD broker founded in 2007. The broker offers diverse market coverage to millions of clients, spanning traditional assets like currencies and shares, as well as other interesting opportunities such as IPOs.
-
Established in 2016, AZAforex is an offshore broker offering short-term trading on 235+ global financial markets, including through binary options with payouts of up to 90%. Three accounts (Start, Pro and VIP) offer unique features, but all provide access to the broker’s Mobius Trader 7 platform, which has benefited from performance upgrades over the years.
-
eToro is a top-rated multi-asset platform which offers trading services in thousands of CFDs, stocks and cryptoassets. Launched in 2007, the brand has millions of active traders globally and is authorized by tier one regulators, including the FCA and CySEC. The brand is particularly popular for its comprehensive social trading platform. Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply. 51% of retail CFD accounts lose money.
-
Pacific Union Prime is an FSCA and offshore-regulated multi-asset broker offering competitive fees and direct market access on forex, commodities, stocks, bonds and indices. The broker supports the popular MetaTrader 4 and MetaTrader 5 platforms and a proprietary mobile app. Fees vary by account type with no commission and spreads from 1.9 pips on the Standard account and $7 commission per lot and spreads from 0.4 pips on the Prime account.
-
MultiBank FX is an established broker offering forex and CFD products since 2005. With 20,000+ instruments, plenty of local payment methods and 24/7 multilingual customer support, the broker is a popular choice among traders globally. New clients can also access a variety of bonus offers and access the hugely popular MT4 and MT5 trading platforms.
-
ActivTrades is a UK-headquartered CFD and forex broker established in 2001. The award-winning brokerage has secured licenses from trusted bodies, notably the UK’s FCA, and facilitates trading on over 1000 instruments spanning 7 asset classes, with over 93.60% of orders are executed at the requested price.
-
Established in 1996, Swissquote is a Switzerland-based bank and broker that offers online trading on an industry beating three million products, from forex and CFDs to futures, options and bonds. Highly trusted, it has built a strong reputation through innovative trading solutions, from becoming the first bank to offer crypto trading in 2017 to more recently launching fractional shares and its Invest Easy service.
-
SimpleFX is an online broker specializing in CFD and cryptocurrency trading, with multi-currency accounts, STP execution, low pricing and no minimum deposit. Bringing innovation and gaining recognition at numerous industry events since 2014, SimpleFX now caters to retail traders from over 190 countries, boasting a client base exceeding 200,000 active users.
-
Established in 2005 in Australia, FP Markets is an ASIC- and CySEC-regulated broker boasting an extensive suite of tradable assets. Its Standard and Raw accounts cater to traders at every level, while it packs a punch in the tooling department, from the MetaTrader suite and intuitive TradingView to actionable trading ideas from Trading Central and AutoChartist.
-
Infinox is a UK-based and FCA-regulated broker that offers diverse trading products thanks to its STP and ECN account types and support for MetaTrader 4, MetaTrader 5 and a proprietary platform. Clients can also benefit from a free VPS that can support automated strategies and a social trading platform, catering to both beginner and seasoned traders.
-
OANDA is an award-winning global broker, established in 1996. The hugely respected brand offers competitive trading accounts and serves clients from 196 countries. It remains a popular option with both beginners and experienced traders thanks to its user-friendly and sophisticated web platform, no minimum deposit and premium currency products and services. The company is also overseen by reputable regulators, including the FCA, ASIC and CIRO.
-
Capital.com offer CFDs on a range of markets with competitive spreads and zero commissions. The broker also offers the Investmate app, negative balance protection and leveraged trading.
-
Trading 212 is a European and UK-regulated CFD broker that also offers stock investing and ISAs. It’s best known for its commission-free trading model and beginner-friendly app, which has helped it attract 2.5 million users and £3.5 billion in client assets.
How Soybean Trading Works
Soybean trading is the buying and selling of soybeans, either directly or by speculating on their price through derivatives.
Trading soybeans can be done through futures, options, ETFs, and CFDs:
- Futures contracts are agreements to buy or sell soybeans at a set price and date in the future
- Options provide the right to buy or sell the commodity at a specified price but without the obligation to do so
- ETFs are baskets of soybean futures contracts traded on exchanges like stocks
- CFDs allow traders to speculate on rising or falling prices without taking ownership of the commodity. CFDs, in particular, are available at many of the top online brokers
Soybean Basics
There are three main types of soybean products: soybeans, soybean oil and soybean meal. As well as human consumption, soybeans are used to make animal feed, plus cooking oil.
Trading prices are influenced by a range of factors including weather conditions, dietary trends, supply and demand in the US and emerging markets, government subsidies, trade agreements, alternative oils, and the US Dollar.
The United States, Brazil, Argentina, and Paraguay are the largest exporters of soybeans, accounting for more than 80% of production. China is the world’s largest importer of soybeans, responsible for more than 60% of global demand.
History
Soybean trading has a long history, dating back to the domestication of soybeans in ancient China more than 3,000 years ago. However, soybean trading as we know it today began in the mid-19th century, with the first soybean crop being planted in the United States in 1851.
Soybeans were initially used for animal feed and fertiliser, but their uses expanded to include food products such as soy milk, tofu, and soy sauce. This led to increased demand for soybeans and the development of soybean trading as a global commodity.
In the early 20th century, the Chicago Board of Trade (CBOT) began trading soybean futures contracts, allowing producers and buyers to lock in quotes for future delivery. This helped to stabilise the market and promoted trading.
Today, soybeans are a major industry, with billions of dollars in annual trade volume. The development of new technologies, such as electronic trading platforms and data analytics tools, has also transformed the way soybean trading is conducted at many retail brokers; it is faster and more efficient.
Price Chart
Factors That Influence Soybean Prices
- US supply: As the largest exporter of soybeans, subsidies, political instability and other factors that affect the local market can have ramifications for commodity prices globally.
- Demand in emerging markets: China is the biggest importer of soybeans and as its economy rises, so too will demand for soybeans, potentially driving up prices. The same is true in other regions, including Africa. In addition, the growing global population and increasing interest in plant-based diets could lead to further rises in demand.
- Weather conditions: Weather events like droughts or flooding in soybean-producing countries such as Brazil, the US, or Argentina can impact global soybean prices. For instance, in 2020, the drought in Brazil caused soybean prices to rise from $873.5 to $1372.5 between August and November. This had a direct impact on UK manufacturers that use soybean meal in animal feed production.
- Oil competition: The oils generated from soybean meal face pressure from rapeseed, linseed, and castor, among others. If these alternatives take some of the market share traditionally enjoyed by soybeans, this could have a negative impact on prices.
- Currency exchange rates: Commodity prices, including soybeans, are generally quoted in US dollars. Producers bank fewer dollars when the world’s reserve currency rises and vice versa. Investors can use soybeans to hedge against a weak US dollar and rising inflation.
- Seasonality: The soybean market is largely driven by seasonal patterns, with prices often rising in the summer months due to increased demand for livestock feed.
How To Trade Soybeans
- Contract For Difference (CFDs): CFDs allow you to speculate on the price movements of soybeans without taking delivery of truckloads of soybeans. Traders can go long or short and use leverage to boost their position sizes and potential returns. Soybean CFDs are offered by many top brokers in the UK, including CMC Markets.
- Futures: These allow traders to buy or sell soybeans at a predetermined price and date in the future. This enables investors to hedge against price fluctuations or to speculate on the future direction of soybean prices. FxPro, for example, offers soybean futures at 12.5 USD per 50 bushels.
- Options: Soybean options contracts are similar to futures, but they give investors the right but not the obligation to buy or sell soybeans at a predetermined price and date. This can be useful for those who want to limit their risk exposure.
- Exchange-traded funds (ETFs): ETFs that track soybeans are also available. These typically hold soybean futures contracts and aim to replicate the price movements of commodities. Traders can buy and sell ETFs like stocks, making them a convenient way to invest in the commodity. One of the most popular soybean ETFs is the Teucrium Soybean Fund (SOYB) which is available at several leading brokers, including IG Index.
- Stocks: There aren’t many publicly-traded companies that solely deal in the production and distribution of soybeans. However, there are companies with indirect exposure to the soybean market, including those that sell seeds to large producers. As a result, popular soybean stocks include the Potash Corporation and the Mosaic Company (both listed on NYSE).
Comparing Soybean Brokers
Market Access
Check that the broker offers access to relevant exchanges, such as the Chicago Board of Trade (CBOT). AvaTrade, for example, offers a range of soybeans instruments including futures, options and ETFs on leading exchanges.
Spreads & Fees
Compare any fees, such as spreads, commissions and funding charges. Soybean brokers may also have overnight charges and swap rates for derivatives.
Pepperstone offers soybean trading with a minimum spread of 1.4 and a contract size of 1 bushel per lot.
Margin Requirements
Margin is the amount of capital that traders need to hold in their accounts to open and maintain leveraged trading positions. Brokers may have different margin requirements, depending on regulatory requirements.
Forex.com and CMC Markets, for example, have a margin requirement of 1:10, or 10%, for soybean trading.
Regulatory Compliance
Make sure that the broker is regulated by a reputable authority, such as the Financial Conduct Authority (FCA). This ensures that UK brokers adhere to strict standards of conduct and have sufficient financial safeguards in place to protect clients.
Top FCA-regulated brokers that facilitate soybean trading include XTB.
Trading Platform
The best soybean brokers will offer a user-friendly platform that provides real-time data, fast order execution and comprehensive charts to track the performance of the agricultural commodity.
The platform should also be available on multiple devices, such as desktops, tablets, and mobile phones. Some of the most used platforms include MetaTrader 4 and cTrader, although many brokers such as eToro offer proprietary platforms which are popular among commodity traders.
Customer Support
The best brokers for trading soybeans will provide excellent customer support, including responsive email and phone services, and live chat.
Also look for educational resources such as webinars, agriculture reports, price news, and trading guides.
Soybean Trading Strategies
Crush Spread
Spread trading is a popular strategy in the grain and oilseed markets and involves simultaneously buying and selling different soybean futures contracts.
In the soybean market, the most common spread trade is the crush spread. Soybean crushing is the process of crushing soybeans to extract their oil – the crush spread is the difference in value between the two.
Thus, traders can take advantage of the potential profit margin between the two markets:
- Selling the crush is commonly used by hedgers, and involves selling soybean oil and soybean meal, and buying soybeans.
- Buying the crush involves buying soybean meal and soybean oil, and selling soybeans.
Corn Spread
Soybeans are heavily impacted by the supply and demand of other crops such as corn, as farmers often produce both depending on the price of each.
The soybean and corn spread strategy involves gauging the ratio of corn to soybean, to determine if the soybean price would be overvalued or underpriced.
A high soybean-corn ratio above 3 signals that farmers are profiting 3x more for each soybean bushel than corn. This indicates that the soybean price could be about to drop and traders can take advantage of this discrepancy by selling soybean futures.
You can find a soybean-corn ratio chart on TradingView.
Soybean Trading Hours
Soybean trading hours vary depending on the exchange where the contracts are traded.
The two major exchanges are the Chicago Mercantile Exchange (CME) and the Minneapolis Grain Exchange (MGEX).
CME:
- Sunday to Friday, 7:00 pm – 7:45 am CT
- Monday to Friday, 8:30 am – 1:20 pm CT
MGEX:
- Sunday – Friday from 7:00 pm to 1:45 am CT
Bottom Line On Soybean Trading
Trading soybeans provides an opportunity to bet on rising or falling demand, hedge against inflation and the US dollar, plus build a diverse investment portfolio. Traders can speculate on the agricultural commodity through several vehicles, including futures, options, CFDs, ETFs, plus stocks in related companies. Importantly, the best soybean brokers will be regulated by the FCA in the UK.
FAQ
Who Is The Largest Exporter Of Soybeans?
The largest exporters of soybeans are the US, Argentina, Brazil and Paraguay. China is the biggest importer of soybeans, importing more than it exports.
What Influences Soybean Prices?
Soybeans can be influenced by a range of factors including supply and demand in major countries like the US, China and Brazil, weather patterns, crop subsidies, the strength of the US dollar, health trends, and the rise of alternative oils like rapeseed. Soybean prices are also volatile because of seasonal conditions which affect yearly crop yields.
How Can I Start Trading Soybeans?
To start trading the commodity, open an account with one of the best soybean brokers. You can then sign into the trading platform or app, and place a buy or sell order depending on your strategy. Note, most soybean brokers have a minimum deposit requirement before you can start trading.
What Strategies Work For Soybean Trading?
Popular strategies for soybean trading are crush spread trading and corn spread trading. Investors can take advantage of profit margins between soybeans and their byproducts, or between soybeans and other crops such as corn. Note, there is no guarantee that you will make money trading soybeans.
What Are The Trading Hours For Soybeans?
Soybean futures contracts are traded on exchanges such as the Chicago Mercantile Exchange (CME) and the Minneapolis Grain Exchange (MGEX), which have slightly different hours. On the CME, trading hours are Sunday to Friday 7:00 pm – 7:45 am CT, and Monday to Friday 8:30 am – 1:20 pm CT.
Article Sources
Major Factors Affecting Global Soybean and Products Trade Projections