Soybean Meal

Soybean meal is produced through processing and separating soybeans into oil and meal components. By weight, soybean meal accounts for about 35% of the weight of raw soybeans (at 13% moisture). If the soybeans are of particularly good quality, then the processor can get more meal weight by including more hulls in the meal while still meeting the 48% protein minimum. Soybean meal can be further processed into soy flour and isolated soy protein, but the bulk of soybean meal is used as animal feed for poultry, hogs and cattle. Soybean meal accounts for about two-thirds of the world's high-protein animal feed, followed by cottonseed and rapeseed meal, which together account for less than 20%. Soybean meal consumption has been moving to record highs in recent years. The soybean meal marketing year begins in October and ends in September. Soybean meal futures and options are traded on the Chicago Board of Trade (CBOT). The CBOT soybean meal futures contract calls for the delivery of 100 tons of soybean meal produced by conditioning ground soybeans and reducing the oil content of the conditioned product and having a minimum of 48.0% protein, minimum of 0.5% fat, maximum of 3.5% fiber, and maximum of 12.0% moisture.

Soybean crush – The term soybean “crush” refers to both the physical processing of soybeans and also to the dollar-value premium received for processing soybeans into their component products of meal and oil. The conventional model says that processing 60 pounds (one bushel) of soybeans produces 11 pounds of soybean oil, 44 pounds of 48% protein soybean meal, 3 pounds of hulls, and 1 pound of waste. The Gross Processing Margin (GPM) or crush equals (0.22 times Soybean Meal Prices in dollars per ton) + (11 times Soybean Oil prices in cents/pound) – Soybean prices in $/bushel. A higher crush value will occur when the price of the meal and oil products are strong relative to soybeans, e.g., because of supply disruptions or because of an increase in demand for the products. When the crush value is high, companies will have a strong incentive to buy raw soybeans and boost the output of the products. That supply increase should eventually bring the crush value back into line with the long-term equilibrium.

Prices – Soybean meal futures prices at the Chicago Board of Trade in 2010 showed weakness early in the year and fell to a 2-year low of $249.6 per ton in February 2010. However, soybean meal prices then staged a solid rally through the remainder of the year to close 2010 up 18% at $370.3 per ton.

Regarding cash prices, the average price of soybean meal (48% solvent) in Decatur, Illinois in the 2010-11 marketing year (i.e., October 2010 to September 2011) through December of 2010, averaged $338.54 per short ton, up by +8.8% yr/yr.

Supply – World soybean meal production in 2010-11 rose +7.4% yr/yr to a new record high of 177.555 million metric tons. The world’s largest soybean meal producers are China with 25.8% of world production in 2010-11, the US with 20.2%, Brazil with 15.1%, and the European Union with 6.0%. U.S. production of soybean meal in 2010-11 fell -5.2% yr/yr to 39.533 million short tons, but that was still below the 2006-07 record high of 43.054. U.S. soybean meal stocks in 2010-11 (Oct 1) rose +28.5% yr/yr to 302,000 short tons, down further from the 2007-08 8-year high of 343,000 short tons.

Demand – World consumption of soybean meal in 2010-11 rose +8.9% yr/yr to a new record high of 174.916 million metric tons. The U.S. accounted for 15.8% of that consumption and the European Union accounted for 19.0%. U.S. consumption of soybean meal in 2010-11 fell -0.4% yr/yr to 27.669 million metric tons.

Trade – World exports of soybean meal in 2010-11 rose +6.8% to 59.457 million metric tons. Brazil accounted for 22.9% of world exports and the U.S. accounted for 14.0%. World imports of soybean meal in 2010-11 rose +8.6% yr/yr to 57.103 million metric tons. U.S. exports of soybean meal in 2010-11 fell -17.7% yr/yr to 9.200 million short tons. U.S. imports of soybean meal in 2010-11 rose +3.1% yr/yr to 165,000 short tons, remaining well below the record high of 285,000 short tons seen in 2003-04.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here