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If you are interested in trading Soybean Meal futures it is helpful to become familiar with the history of the Soybean Meal market. The great majority of the world's soybeans are processed by the soybean crushing industry to produce crude soy oil (also called "crude soybean oil") and soybean meal. The value of the soybean lies in the fact that there is a strong demand for both these ingredients. The separation of these two major components has given rise to the soybean crushing industry.
Soybean meal is the most common and usually the most economical vegetable protein supplement. It is used primarily as a protein source in animal feeds for the production of poultry, beef, pork, milk, butter, and eggs. A small proportion of the meal is used to make defatted soy flour, soy protein concentrates and isolates, and textured soy protein products.
A soybean processing plant can use soybean, soybean oil, and soybean meal futures to hedge its gross processing margin - the difference between the cost of soybeans and the eventual revenue of the finished oil and meal. Buying soybean futures protects against rising inputs costs. Selling soybean oil and soybean meal futures protects against falling prices for the later sales of soybean meal and soybean oil. This risk-management program can help stabilize costs and pricing for the hedger, and can create a profit opportunity for the speculator willing to take a risk.
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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.
