Food for Thought: The Soy Journey from East to West
Loading...

A key factor behind surging soybean imports has been China’s need to rebuild and feed its hog population following a calamitous outbreak of African swine fever. By some estimates, the virus wiped out half the domestic hog population in 2018 and 2019, but has since been restored to nearly 90% of previous levels. Furthermore, much of this new capacity is industrial-style, large-scale hog operations, which use a significant amount of soybean meal crushed from soybeans instead of the ad hoc feed materials that small backyard hog operations had used.

SoyImportExport

Full Circle – Soy’s Mileage

And so the humble soybean, which began its important existence in the Far East several millennia ago, journeyed west, only to return back to the East from where it came. Had British economist Adam Smith lived to see this, he most certainly would have approved, for it is free trade in its finest form. Efficient allocation of resources meant that China would produce labor intensive manufactured goods to send west, while the U.S. would produce land intensive farmed goods to send east.

Though Brazil has surpassed the U.S. to become the biggest producer of soybeans, the United States’ role remains central in the global soybean trade flow. U.S. institutions such as the Chicago Board of Trade, which has its origins dating back to 1848, have highly liquid futures and options contracts on soybeans, soybean meal and soybean oil. These global benchmarks are used daily by merchants, traders, and importers to determine where prices are, thus facilitating the international trade of soy.


 

 

OpenMarkets is an online magazine and blog focused on global markets and economic trends. It combines feature articles, news briefs and videos with contributions from leaders in business, finance and economics in an interactive forum designed to foster conversation around the issues and ideas shaping our industry.

All examples are hypothetical interpretations of situations and are used for explanation purposes only. The views expressed in OpenMarkets articles reflect solely those of their respective authors and not necessarily those of CME Group or its affiliated institutions. OpenMarkets and the information herein should not be considered investment advice or the results of actual market experience. Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade. BrokerTec Americas LLC (“BAL”) is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.. In the United Kingdom, BrokerTec Europe Limited is authorised and regulated by the Financial Conduct Authority. CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl). CME Investment Firm B.V. is also incorporated in the Netherlands and regulated by the Dutch Authority for the Financial Markets (AFM), as well as the Central Bank of the Netherlands (DNB).

©2025 CME Group Inc. All rights reserved