Soybeans are used to make soy milk and vegetable oil as well as being popular appetisers in sushi. You might not have heard of soybeans or soybean oil before, or at least not by this name, but it’s crucial for feedstock and the production of vegetable oil. There are several different forms of soybean that you can invest in, such as in the beans, soybean oil, and soybean meal. Usually, you would do so with soybean futures, but you can also invest in futures options and exchange-traded funds (ETFs).
Soybeans are a commodity. Because they are used to make staple pantry products and animal feed, they continue to have demand even when the market is struggling, which could make them a good investment. Of course, with the recent coronavirus outbreak, it’s at a relatively low price, but it is expected that this will recover towards the end of the year.
You might be more familiar with soybeans with their Japanese name, “edamame”. These are often offered in sushi restaurants, delicious with a sprinkle of salt and some soy sauce! They’re not just eaten, though! The oil is extracted from soybeans and used to make vegetable oil, which you undoubtedly have in your cupboard.
Another use for soybeans is for animal feed. Soybeans are made up of 80% meal which is used to feed poultry and livestock. It is also used to make protein alternatives and soy milk.
There are three main ways that you can invest in soybeans:
A “future” is just a legal agreement to buy something at a later date. If the prices change between the date that you make the agreement and the date that you agree to make the purchase, there won’t be a change to the price you pay.
This can work in your favour, if you buy the futures contract while the prices are low and they increase before the agreed date, then you make a profit. It can also go the other way, though!
To buy soybean futures, you agree to buy a set number of bushels of soybeans at a set price. On the date of expiration, the transaction is made.
Upon expiration of the contract, you’re often required to actually receive the delivery of soybeans, so (unless you’re hungry or own a sushi restaurant or otherwise have a need for a ton of soybeans), you’d need to exit your position prior to this.
Futures options give you some of the benefits of buying soybean futures, without getting any soybeans delivered to your home. Futures options are the right to buy or sell futures in a specific time period at a set price. Options can be traded, and become worthless if they aren’t used.
Exchange-traded funds are a popular investment choice. They’re aimed at tracking the performance of an asset, in this case, soybeans.
ETFs can be traded on an exchange in the same way you could trade equities on the stock exchange.
The main soybean ETF is Teucrium Soybean, which is a fund aimed at giving direct exposure to soybeans without futures contracts. It can be purchased on the NYSE Arca.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Ever wondered how to invest in SJPA ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.
Ever wondered how to invest in FTAL ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.
Ever wondered how to invest in FLGB ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.
Ever wondered how to invest in HUKX ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.
Thinking about buying shares in Flutter Entertainment? We explain how to do it and compare a range of providers who will give you access to global markets.
Sales of Reckitt Bencksier products like Dettol have risen due to coronavirus. Here’s how you can invest in Dettol, by buying Reckitt Benckiser shares.
Ever wondered how to buy shares in AT&T? We explain how and compare a range of providers that can give you access to many brands, including AT&T.
Ever wondered how to buy shares in Wincanton? We explain how and compare a range of providers that can give you access to many brands, including Wincanton.
Ever wondered how to buy shares in United Utilities? We explain how and compare a range of providers that can give you access to many brands, including United Utilities.
Find out how to buy shares in RELX, see its share prices over the last three months and check out our must-do checklist if you’re looking to invest.
