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Basic Fundamentals

What Market Fundamentals Can Affect The Soybean Meal Futures?

The two basic products of soybeans are soybean meal and soybean oil. Soybean meal is the dominant protein supplement used in U.S. livestock and poultry feeds. Animal feed utilized 98% percent of the total meal produced. In the protein-short areas of the world and elsewhere, soybean meal is finding increasing use in human food products.

Soybean meal is a market with acceptable volitility. When you are considering a trade in soybean meal market some of the basic fundamentals that you should consider are:

1. Soybeans Each bushel of soybeans produces about 48 pounds of soybean meal and 11 pounds of soybean oil so the soybean meal market is often closely tied with developments in the soybean market. It is important to look at the soybean crop size and crop conditions, and the level of surplus or shortfall in the U.S. and Brazil.

2. Dried Distillers Grain With Soluble (DDGS) The production of bio-diesel creates a byproduct know as DDGS. DDGS can be mixed into livestock feed the same way that soybean meal is. DDGS is becoming a major direct competitor of soybean meal. The more bio-diesel that is produced, the more DDGS that comes into the market. DDGS lowers demand for soybean meal and its price, and increases the demand for the soybean oil and its price.

3. China The are a number of factors contributing to an increase in Chinese soybean meal demand. Chinese income growth and urbanization have shifted the food mix away from starchy staple grains toward higher protein livestock products. To meet the increasing demand, Chinese livestock production is trending toward large-scale commercial operations that use larger proportions of soybean meal in feed rations.

4. USDA Crop Reports The USDA publishes several key crop reports that are helpful in your research and trading of soybean meal futures and soybean meal options. In addition to the USDA crop reports, the National Oilseed Processors Association releases a monthly soybean crush report. The Soybean Crush report provides a sense of the amount of soybeans that are being processed into soybean oil and soybean meal.

5. Corn Soybean meal is a substitute for corn for feed purposes; therefore, the price of one affects the demand and price of the other. 

These are just some of the basic fundamentals to keep in mind when you are considering a trade in the soybean meal market. Before opening up a commodity account to trade soybean meal you should consult with a licensed commodity broker that follows the soybean meal market to discuss investment strategies.

CBOT Soybean Crush Reference Guide

Click on the link above to download a very informative .pdf brochure entitled "CBOT Soybean Crush Reference Guide". It was published by the Chicago Board of Trade. The crush spread is often used by processors to hedge the purchase price of soybeans and the sales prices of the soybean meal and soybean oil. It also offers many opportunities for speculators, as the spread relationship between the raw material and its products varies over time. This is a must read guide for any speculator or hedger considering an trade in the soybean oil futures or soybean options.

Click here to contact a licensed commodities broker with experience in the soybean meal market.






Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Carefully consider the inherent risks of such an investment in light of your financial condition. Past results are not necessarily indicative of future results. Please do your own research before investing in the futures market. This site contains no investment recommendations. The information and opinions contained herein comes from sources believed to be reliable, but are not guaranteed as to accuracy or completeness.