Once considered fit for animal feed only, the soybean has become a staple in the world diet and on the commodities Forex market with a very high yield.

First brought from China and Japan as ballast for ships in the early 1800's, this crop was ignored until the late 1870's when several farmers tried to grow it, to see if they could use it to feed their livestock.  After the Second World War the crops in China were devastated and the US began to produce enough for its own use.  Once hailed as a feed for all types of livestock, it is now used in almost every food we eat from vegetable oil to candy.

What does this have to do with the Forex?  The soybean is openly traded on the Forex and as world demand continues to escalate, the future for soybeans looks very good.  Not only is there a high demand for them in the animal feed industry and the human food industry, but now the use of them in bio-fuels is going to fuel a volatile market to new heights.

Soybeans are traded just as all other agricultural commodities are, by trading in futures, meaning that since soybean crops are ready seven different time during the year for harvest, traders hedge their bets on the crops that are either still in the ground or in some cases not even planted yet.  The idea behind this is to buy when the prices are low, in the hopes that demand for the crop will cause the prices to go up and make a profit on the sales. 

By trading in futures, the trader does not have to come up with any money up front, since payment is not due until delivery of the crop.  By the time the crop is ready for delivery, the trader who bought the futures has hopefully long since realized his profit and has his money reinvested in the next crop.

Speculating on soybeans has proven to date to be a very profitable investment as world demand continues to rise, even in the prevailing global economic situation.  The volatility of this commodity can make it a very risky investment for the newcomer to trading on the Forex.  Even though the growth in demand is not expected to slow down, there are many factors that affect the price of soybeans on the open market and the savvy investor spreads his investments into a variety of options to avoid losing money.