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Soybean Futures and Options Education
Soybean futures and options quick facts:
-
5,000 bushel contract
-
One cent move equals $50
The History of Soybeans and CBOT Soybean
Futures Trading
Soybean future and soybean
option contracts are traded on the Chicago Board of Trade.
Soybeans originated in China but over the centuries have
been cultivated in many temperate areas around the globe.
George Washington Carver first tested soybeans, among other
plants, to find out uses for them and diminish the
dependence on cotton as the single commodity of the Southern
economy. He invented soybean based varnishes, paints, inks,
mayonnaise, salad dressings, linoleum, plastic and even
fuel. Soybean based inks are currently being used in over
3000 various newspapers across the U.S. including the LA
Times. Henry Ford and Mr. Carver partnered up and used
soybeans to make plastic window handles, gas pedals and even
dent proof trunk covers for many of the Fords built in the
1930's and 40's. The original diesel engine, invented by
Rudolph Diesel, actually ran off of peanut oil based on
Carver's research and today's diesel engines can run almost
entirely on soybean oil. Using soybeans as a fuel product is
just recently becoming investigated again because the high
petroleum prices have made it economically feasible to use
green fuels such as ethanol made from
corn
and
sugar and
bio diesel fuels
made from soybean oil.
Things to know about CME
group soybean futures and options:
-
Soybean futures are a dollar
denominated physical delivery 5,000 bushel
(approximately 136 metric tons)
-
Primary uses of soybeans include
livestock feed, edible oil and other foods
CME group soybean futures
and options provide a way to:
-
Participate in global price discovery
of soybeans
-
Effectively manage the price risk of
soybean merchandisers, producers, food processors,
livestock operations, importers and others heave related
to the purchase or sale of soybeans
-
Take advantage of arbitrage and
spread opportunities with other commodities including
related grains, oilseeds and livestock
-
Identify short and long -term
cyclical price and volatility patterns of soybeans
-
Trade to hedge or speculated based on
expectations of directional price, spread movement or
volatility in soybeans
Soybeans are vital for a diverse array of food and
industrial products. They provide the raw material for
livestock feeds, cooking oils, and salad dressings, not to
mention industrial products, fungicides, and antibiotics. In
the United States alone, farmers grow just under half the
world's supply, and they remain a leading dollar-earner
among U.S. agricultural exports.
Soybean futures
contracts and soybean option contracts are one of the most
active of all the agricultural futures markets.
Price stability is essential for those
businesses that rely on soybeans for their manufacturing
processes. Global supplies fluctuate continuously due to
planting decisions made every spring, as well as variations
in temperature and precipitation throughout the growing
season. In addition, demand never ceases to change. As a
result, prices can vary substantially from day to day. Many
savvy farmers use soybean futures and soybean options to
hedge their crops against adverse soybean futures price
movements.
Ironically, soybean futures markets are
perceived for their volatility, but, in reality, the markets
provide the mechanism to ensure fairly consistent pricing of
soybean and soy products. The price of cooking oil, for
example, does not rise or fall to the degree of prices for
unprocessed soybeans.
Soybean Future Contract
Specifications
Soybean Futures
Size -
5,000 bushels
Tick Size
-
$0.025/bu
Daily
Price Limit -
$0.50/bu
Strike
Price -
$0.25/bu
Contract
Months -
Jan, Mar,
May, Jul, Aug, Sep, Nov
Last
Trading Day -
Seventh
business day proceeding the last business day of the
delivery month.
Expiration
Day -
N/A
Trading
Hours -
9:30 a.m.
- 1:15 p.m.
Ticker
Symbol -
S
Soybean Options
Size -
One
CBOT Soybean Futures
Tick Size
-
1/8c/bu
Daily
Price Limit -
$0.50/bu
Strike
Price -
N/A
Contract
Months -
Jan, Mar,
May, Jul, Aug, Sep, Nov
Last
Trading Day -
Last
Friday proceeding the first notice day of the corresponding
soybean futures contract by at least five business days
Expiration
Day -
Unexercised options expire at 10 a.m. on the first Saturday
following the last trading day.
Trading
Hours -
9:30 a.m.
- 1:15 p.m. Central Time
Ticker
Symbol -
CZ-
call;-PZ- put
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