Soybean Futures Prices Affecting Tofu Production

As the US drought sends soybean futures prices to record highs, the country of Indonesia is contemplating halting production of their soybean-based staple foods because of the high costs.  This comes at a time of Ramadan – a holy month observed by billions of Muslim’s whom consume tofu & tempeh food products on a daily basis.

Indonesian food makers are demanding their government lift a six-month 5% tax-duty on imported soybeans to ease the financial pain, mainly of sudden inflation which is reportedly as high as 33%.  This country is particularly in trouble as they import 70% of their needs.

Barb Levy, chief director for Futures & Options Xecution’s Futures Division in Chicago, stated today regarding the current soybean futures situation, “In response to the rising soybean (futures) prices, cities in Indonesia are calling for the government to scrap the 5% tax on soybean imports for the rest of the year. (Currently) 70% of the country’s soybean usage comes from imports and 30% from their own production.”

The trend for soybean futures remains up, and I am awaiting more of a pull-back, or a lower-risk trade before initiating another long soybean futures position.  The soybean futures volatility has me on the sidelines until a clear picture unfolds.

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