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Contributor: CME Group

Level: Beginner

Financially settled South American Soybean futures will offer a more precise tool to manage exposure to the Brazilian soybean market. Brazil plays a key role in the global soybean market as the largest producer and exporter of soybeans, driving the need for a regional benchmark for price discovery. Learn how South American Soybean futures work and how the spread trade works with our existing North American Soybean futures to easily manage pricing differences between regionally grown soybeans.

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Lesson: #1 South American Soybean futures product overview

The global soybean market continues to change and evolve. Factors such as long-term production patterns, shifting global trade flows, and geopolitical issues continue to impact soybean prices, production levels in various countries, and trade patterns. In the last few years, Brazil has become the world’s largest exporter of soybeans ‒ surpassing the United States for that title. Both markets have their own production and export dynamics, leaving market participants looking for ways to manage exposure to both regions.

Lesson: #2 Trade the basis – North and South American Soybean futures contracts

All around the globe, market participants trade basis to the Chicago Board of Trade Soybean futures contract. Basis is the price premium or discount for the physical commodity in a specific location, relative to the futures price. It is driven by local supply and demand, as well as transportation costs between markets.

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