The livestock farming raw material products belong to the group of agricultural commodities. Trading with pork-products at the futures exchange markets takes place in form of living animals (lean hogs) and in the form of pork bellies.
Pork bellies serve for production of bacon and are offered in frozen form. The trade with pork bellies decreased during the last years extremely heavily. The futures-turnovers only claim 10 % compared to the marks during the 1980’s.
Influence-factors of the supply- and demand side as well as the price development are to find at the base product. The demand for hog meat increases during the summer-months which tendentially leads to higher rates from spring. Livestock producers face a great deal of risk. One is uncertain weather, which affects feed costs (like corn, cereals), the availability of feed and forage, rates of gain, conception rates, survivability of young animals, and shipment. All these components affect the price of a futures contract. Another risk (and one more component which can affect the contract-price) is the constant threat of disease and epidemics (such as BSE, hog cholera, bird flue) which impinge not only on the affected meat-group, but also create a mutual substitution effect on all kinds of meat. However, the end consumer’s respective demand behavior can be steered through the storage of frozen pork bellies. Livestock producers know that staying on top of animal health requires the best management in agriculture. Producers have managed such production risk with top-notch husbandry practices. But no amount of husbandry can address market risk – the uncertainty of prices at market time, owing to shifting supply and demand factors. That’s where the futures market comes in.
The Chicago Mercantile Exchange (CME) began trading Frozen Pork Belly futures in 1961 – the first futures contract based on frozen, stored meats. Trading in Frozen Pork Belly contracts was developed as a risk management device to meet the needs of meat packers who processed pork and had to contend with volatile hog prices as well as price risks on processed products held in inventory. Thus, the futures contract was designed to help processors and warehouse operators manage these price risks. The Frozen Pork Belly futures contract performs the same two primary functions common to many futures contracts – that of guiding inventories and establishing forward pricing.
Most important trading place for pork bellies is the CME. The quotation takes place in U.S. Cent per American pound (lb.), whereby a contract comprises 40,000 lbs. The tick-size is 0.00025 U.S. Dollar/lb. (10 U.S. Dollar/contract).
Most important stock exchange centers: CME (Chicago Mercantile Exchange)
Contract-cycles: February, March, May, July, August.
Contract-size: 40,000 lbs.
Share/SaveSoybeans are part of the legumes family. The plant derives from East Asia and is cultivated in China since nearly 5,000 years. The plant made its triumphal march into the remaining parts of the world first in the 17th and 18th century. Measured by their numbers, commodity contracts on soybeans futures take the third place behind crude oil and corn.
The soybean is an oil-bearing plant, whereby its oil content with 17 % is unusually high for beans. With the vegetable fat and the 40 % protein content soybeans are a valuable protein-supplier for men and animals.
Soybeans have a seemingly limitless range of usage. Most importantly, of course, they serve as a central ingredient in baby food, diet-food products, beer, ale, noodles, cooking oil, margarine, mayonnaise, salad dressing, shortening, etc. Lecithin is a natural emulsifier derived from soybeans. Several important low-fat sources of protein, such as tofu, miso, and soymilk also use soybeans as a major ingredient.
Soybeans are increasingly being seen as renewable resource with many industrial applications, too. For example, many publications are printed using soy ink, which is more environmentally-friendly than petrochemical-based inks. Soy diesel is a new energy source that’s capturing the attention of the trucking industry. And soybeans are also used in adhesives, cleaning material, polyesters, and other textiles.
The worldwide demand for soybeans and its products is increasing disproportionately high since years. It trend is distinctly above the other kinds of cereals (such as corn and wheat) and as well above the population development’s tendency. Responsible for the demand-boom is the plant’s usage as fodder and the growing interest for bio-fuels. The largest areas of cultivation can be found on the American continent (U.S.A., Brazil and Argentina) where 220 million tons of soybeans are harvested per year. By far the biggest exporters are the U.S.A. Importers are China and the EU, followed by Japan and Mexico.
The weather is the most important influence-factor on the supply-situation for agricultural products. Further influence-magnitudes are the genetic research and the seasonal growing- and harvesting rhythm (price-highs are mainly reached during cultivation periods (May-June), price-lows are often reached during and around the harvesting periods in fall). Other important influence-magnitudes are the increase of the population in connection to the growing prosperity (higher demand for meat means higher demand for fodder), the growing demand for bio-fuels (ethanol) and the influence from the side of the politics (keywords like: subsidies or trading restrictions). Soyrost, an aggressive fungal disease from Asia, is additionally an increasing danger for the large monocultures.
Most important trading place for soybeans is the Chicago Board of Trade (CBOT), whereby a mini-future (ticker-symbol: Y) is traded and additionally since 2005 also a contract on South American soybeans. The traded contracts are quoted in U.S. Cent per bushel (bu.), whereby a contract comprises 5,000 bu. (1 bu. soybeans = 60 lbs. or 27.2155 kg). Like with other commodities, soybeans are also traded on additional commodities exchange places such as in Brazil, Argentina, China and Japan.
Most important stock exchange centers: CBOT
Ticker symbol: on the pit (“open outcry”) S, at e-commerce (a/c/e): ZS
Tick-size: 0.025 U.S. Cent per bushel (bu.), 12.50 US$ per contract.
Contract-cycles: every second month, beginning with January, as well as in August.
Contract-size: 5,000 bu. soybeans.
Trading hours: Pit (“open outcry”): Monday to Friday, 9.30 a.m. – 1.15 p.m. Chicago time (CT), and e-commerce: Sunday – Friday, 6.31 p.m. – 6.00 a.m. and 9.30 a.m. – 1.15 p.m. Chicago time (CT). Trading ends at 12 a.m. CT on the last trading day.
Share/SaveSoybean oil, or soya oil, is a cooking oil which is recovered through extraction or squeezing of the soya plant’s seeds – the so called soybeans.
Soybean oil remains the most widely used edible oil in the United States, with consumption exceeding that of all other fats and oils combined. Bean oil is a major ingredient in cooking oil, margarine, mayonnaise, salad dressing, and shortening. Lecithin is a natural emulsifier derived from soybean oil, and without it, chocolate would separate from cocoa butter and spoil many a sweet moment. It is used as stabilizer, humectant and thickener in almost all industrially manufactured groceries, from sauces over chocolate and ice cream to cookies, pastries and bread rolls. But soybeans — derivatives like bean oil and meal — have many other uses, too. They’re a central ingredient in livestock and poultry feeds, and they’re also an important ingredient in low-fat sources of protein, such as tofu, miso, and soymilk. Technical uses include adhesives, cleansing materials, polyesters, and other textiles.
The peak-oil debate, which is coming to surface now more than ever (it discusses the approaching decrease of the global crude oil outputs), reinforces the usage of soybean oil for the production of biodiesel. Soybean oil literally advertises itself as a substitute for fuel, diesel and heating oil because of its prominent environmental features (high greenhouse climate-neutrality) and its – with 93 % – extremely high energy-efficiency (= required amount of energy for growing and processing). For comparison: the energy-efficiency of corn-ethanol account for ca. 25 %.
The soybean’s price development has direct influence on the soybean oil and soybean meal arising as a by-product from the bean. But it can come to feedback-effects if one of these products is stronger or slighter demanded or produced.
Soybean oil is traded at the Chicago Board of Trade (CBOT), whereby a contract is quoted in U.S. Cent per American pound (lb.) and comprises 60,000 lbs. (1 lb = 0.453592 kg).
Most important stock exchange centers: CBOT
Ticker symbol: on the pit (“open outcry”) BO, at e-commerce (a/c/e): ZL
Tick-size: 0.01 U.S. Cent per lb., 6 US$ per contract.
Contract-cycles: January, March, May, July – October, December.
Contract-size: 60,000 lbs.
Trading hours: Pit (“open outcry”): Monday to Friday, 9.30 a.m. – 1.15 p.m. Chicago time (CT), and e-commerce: Sunday – Friday, 6.31 p.m. – 6.00 a.m. and 9.30 a.m. – 1.15 p.m. Chicago time (CT). Trading ends at 12 a.m. CT on the last trading day.
Share/SaveWheat is a cereal crop (like corn, rice, millet, barley, rye, oat) and belongs to the family of bromes (Poaceae). The first kinds of wheat cultivated by men in the Middle East (or, formerly more common, the Near East) were einkorn wheat and wild emmer. The oldest findings of huskless wheat date back to 7800-5200 BC. Therefore, wheat is the second-oldest cereal crop after barley. The triumphal march of wheat began in the 11th century with the emerging white bread. The primary use for wheat is flour, the key ingredient in breads, pastas, crackers and many other food products. Wheat by-products are also used in livestock feeds. Wheat has significant industrial applications, too, as an ingredient in starches, adhesives, and coatings. Today wheat is the most cultivated cereal crop and occupies the largest cereal acreages.
The different kinds of wheat constitute the second-most cultivated cereal of the world (after corn but before rice). The different kinds of wheat are traded on different futures exchanges, depending on sowing date and climate zones. The “Soft Red Winter Wheat” is traded at the Chicago Board of Trade (CBOT), while the “Hard Red Winter Wheat” is traded at the Kansas City Board of Trade (KCBT). At this only the kinds of wheat cultivated in the U.S.A. are considered. Therefore these kinds of wheat are popularly denoted by their cultivation area: Kansas-durum wheat (region: Kansas, Texas, Nebraska, Oklahoma) and the Chicago-soft wheat (Illinois, Missouri).
The worldwide annual production of about 630 million tons is covering roughly one-fifth of the world-population’s required calories. The flour of the Chicago-wheat is predominantly used for cakes, cookies, snacks and crackers; the Kansas-wheat especially for bread and pastas. The steadily rising oil prices generate a demand for cereals that are used for the production of bio fuels (ethanol).
The biggest producers of wheat are China, India, the U.S.A. and France. Germany is only ranked at 8th place, but can show an average harvest of about 7.5 tons (t) per hectare (ha). Compared to that, the global average is only 2.9 t/ha. Biggest exporters are above all Argentina, Australia, the EU, Canada and the U.S.A. Next to Russia are Asian Countries the biggest importers.
The weather is the most important factor of influence on the supply situation for agricultural products. Dry weather and long persistent drought can have great impact on supplies and prices, as well as extremely wet periods, extreme temperature fluctuations or environmental disasters. Further important influence factors are: The seasonal growing– and harvesting rhythm (price-lows often in the harvesting months in summer), the already mentioned demand for bio fuels and the influence from the side of politics (keywords like: subsidies or restrictions on trading).
Most important trading places for the Soft Red Winter Wheat is the Chicago Board of Trade (CBOT), for the Hard Red Winter Wheat it is the Kansas City Board of Trade (KCBT). The traded contracts are quoted in U.S. Cents per bushel (bu.) at both trading places, whereby a contract comprises 5,000 bu.
Most important stock exchange centers: for Soft Red Winter Wheat: CBOT
Most important stock exchange centers: for Hard Red Winter Wheat: KCBT
Contract-cycles: March, May, July, September, December.
Contract-size: 5,000 bu.
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