Soybeans Product Guide

 Currently, soybean futures  trading manual is provided in Chinese language only, which can be downloaded from DCE's Chinese website, under the Education section. 

Introduction 

China Soybean Production and Consumption

Soybeans are planted all around the world, with the largest planted areas located in North America, South America and Asia.  Over the years, global soybean production has consistently ranked first among all of the oil-bearing crops.  The United States is the world's leading soybean-production nation, followed by Brazil, Argentina and China.  China's soybean crop consists entirely of non-genetically modified soybeans, while soybeans in North and South America are mostly of the genetically modified variety. 
China's primary Soybean-producing region is Heilongjiang province, in the far Northeastern part of the country.  6.205 million tons of soybeans were produced in Heilongjiang in 2008, accounting for 40% of the country's entire crop. 

China's soybean crop has been unable to keep pace with the rapid growth of domestic consumption.  In fact, while domestic consumption has been growing with a compound annual growth rate of 8.99% since 2000, domestic production has been decreasing at a CAGR of -0.61%, and area of soybeans harvested has been decreasing at a CAGR of -0.92%.  Thus, imports have grown rapidly in the last decade to make up for the lack of domestic supply. 

While global soybean consumption has had ups and downs over the last decade, the overall trend has been toward increasing consumption.  Global consumption of soybeans has increased with a CAGR of 3.35% over the last decade.  As China's urban and rural living standards have improved, domestic demand for soybeans has also increased: demand for soybean crush has increased greatly, primarily to supply the rapidly increasing demand for soybean oil and meal.  Demand for food and industrial use of soybeans has also steadily increased.  In 2008, China overtook the United States as the leading global consumer of soybeans. 

Table 1: China Soybean Data Breakdown 2000-2008

Unit: 1,000 metric tons

 

2000

2001

2002

2003

2004

2005

2006

2007

2008

Production

15,411

15,407

16,507

15,394

17,404

16,350

15,082

12,725

15,545

Imports

13,244

10,386

21,416

16,933

25,806

28,317

28,726

37,816

41,098

Supply

28,655

25,793

37,923

32,327

43,210

44,667

43,808

50,541

56,643

Seed Use

845

866

699

1,015

950

910

870

745

711

Food/Industry Use

7,195

7,433

6,962

7,272

7,673

7,800

8,150

8,200

8,000

Oil Extraction

19,935

18,000

27,354

25,245

33,500

35,500

34,700

38,500

42,500

Total Consumption

28,175

26,487

35,015

33,532

42,123

44,210

43,720

47,445

51,210

Exports

208

304

265

319

390

354

462

452

400

Demand

28,383

26,791

35,280

33,851

42,513

44,564

44,172

47,897

51,610


Source: China Grain and Oils Information Center


Imports and Exports

The United States is the world leading exporter of soybeans, with exports accounting for nearly 45% of the global total, while Brazil and Argentina are the 2nd and 3rd largest exporters, respectively.  Since 2002, China has been the world's leading soybean importer, accounting for over half of all global soybean imports in 2009.   

Table 2: Global Soybean Imports 2000-2009

Unit: 1,000 metric tons

 

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

China

13,245

10,385

21,417

16,933

25,802

28,317

28,726

37,816

41,098

50,338

E.U.

17,602

18,675

16,943

14,675

14,539

13,937

15,291

15,123

13,213

12,900

Japan

4,767

5,023

5,087

4,688

4,295

3,962

4,094

4,014

3,396

3,402

Mexico

4,381

4,510

4,230

3,797

3,640

3,667

3,844

3,584

3,327

3,450

Total

53,052

54,385

62,914

53,999

63,473

64,129

69,066

78,118

77,165

87,457


Source: U.S. Department of Agriculture

Soybean Futures

Volume and Open Interest Trends

 
Soybeans were among the first contracts traded at the DCE when it opened to the public on November 18th, 1993.  Since then, it has been one of the exchange's key commodity product offerings.  Until 2002, soybeans were traded under the generic title "Soybeans"; however, on March 15th, 2002 the generic contract was replaced with the "No. 1 Soybeans", or non-genetically modified soybeans, futures contract.  The No. 2 Soybeans, or genetically modified soybeans, contract was launched on December 22nd, 2004.  Following the launch of No. 1 Soybeans, it quickly became one of the most actively traded agricultural futures in the world, and in 2003 it was the only agricultural futures contract among the world's top 20 contracts.  Soybeans trading at the DCE peaked during the bull market of 2008, surpassing 100 million contracts traded throughout the year. 

Price Trends
 
In general, five key factors influence soybean price movements in China: the supply of soybeans, consumption patterns, related commodity prices, international soybean prices and storage and transport costs. 

Most global soybean production is divided between North America and South America, and thus supplies tend to be concentrated in six month cycles.  The harvest season in South America usually lasts from March to May, while in North America it occurs in September and October.  America is the largest supplier of soybeans to China, and thus changes in production volumes in the U.S., as well as domestic import volumes exert a great influence over Chinese soybean prices.  Changes in consumption patterns can also affect prices: while demand for food use tends to remain relatively stable, soybean crush, meal and oil demand can fluctuate greatly, which can have a large effect on soybean prices.   

Trading Patterns

Soybean trading at the DCE follows similar patterns to corn trading.  As a bulk commodity, trading follows a seasonal pattern, with soybeans for January, May and September delivery seeing the vast majority of trading and open interest activity.  As each contract nears its pre-delivery month, most of the open interest rolls over into the next active contract (for example, most of the open interest for the May 2009 contract rolled over into the September 2009 contract throughout April), while overall open interest levels tend to remain relatively stable throughout the year.

Delivery

Since 1993, over 7 million tons of soybeans have been delivered through the DCE system.  Prior to 2004, soybeans accounted for over 90% of all deliveries at the DCE, though that rate has been steadily falling ever since.  In 2008, soybean deliveries accounted for 26.5% of all DCE deliveries.  Nearly three-quarters of all soybean deliveries are delivered by rail to Liaoning, Shandong, and the Hebei-Beijing-Tianjin region.

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