Soybean meal is the part of soybeans left after soybean oil has been extracted. It has been in production since the 1920s when soybean oil extraction started, and it’s used in making both human and animal food. In fact, soybean meal has become a staple in livestock and poultry diets and is an important source of protein for vegans.
The soybean meal futures market is one of the most liquid and easiest ways to access the soybean meal market. Soybean meal futures trade on the CME.
As a result of its economic importance, soybean meal futures contracts are traded on some commodity exchanges. Soybean meal futures are popular in the agricultural commodity sector, and they are used as the benchmark for the current value of soybean meal.
|Soybean Meal Futures Contract Specifications
100 Short Tons, Which is around 91 metric tons
January (F), March (H), May (K), July (N), August (Q), September (U), October (V) and December (Z)
Sunday – Friday 7:00 p.m. – 7:45 a.m. CT and Monday – Friday 8:30 a.m. – 1:20 p.m. CT
48% Protein Soybean Meal, meeting the requirements listed in the CBOT Rules and Regulations
Last Trade Date
The business day before the 15th calendar day of the contract month.
Last Delivery Date
Second business day after the last trading day of the delivery month.
Uses of Soybean Meal
Soybean meal futures makes it possible for the commodity to be easily accessed by people who need it in making one product or another. Due to its high content of certain essential amino acids, protein-energy balance, and overall nutrient composition, soybean meal has become the preferred choice for protein supplements in livestock and poultry feed.
About 98 percent of soybean meal produced all over the world is used in making animal feed, such as pet feed, poultry feed, livestock feed, and fish feed. In the US, about 48 percent of the soybean meal used for animal feed is fed to poultry, while 26 percent and 21 percent are fed to pigs and cattle respectively. The remaining 5 percent is used for fish and pet feed.
Apart from animal feed, there are many products prepared from soybean meal for human consumption. Examples of such products include tofu, tempeh, soy milk, soy sauce, soy flour, soy lecithin, soybean meat, and textured vegetable protein (TVP), which are very important protein sources for vegans.
The Largest Producers and Consumers of Soybean Meal
According to the United States Department of Agriculture, the United States is the largest producer of soybeans in the world. However, China tops the list of soybean meal production, followed by the US, Argentina, and Brazil. Other top producers of soybean meal are the EU, India, Mexico, Russia, Paraguay, and Egypt.
In terms of soybean meal consumption, the list includes China, the United States, the EU-27, Brazil, Mexico, India, Vietnam, Indonesia, Thailand, Russia, and Iran. Soybean meal futures is the most important way of trading the commodity globally.
Why Trade Soybean Meal Futures Contracts?
There are different reasons for trading the soybean meal futures market. While some trade soybean meal futures contracts to make profits, others are in the market to secure good prices for their products, ensure a stable supply of the commodity, hedge against inflation, or diversify their portfolio.
Hedge against price fluctuations: While soybean meal producers come to the soybean meal futures market to secure a fair price for their product, makers of animal feed come to the market to ensure an adequate supply of the commodity they use in making their products.
Portfolio diversification: Many investors and fund managers come to the commodity market to spread their risk across many asset classes, and soybean meal futures is a popular commodity among agricultural commodity enthusiast.
Inflation hedge: With the way central banks manipulate interest rates and print new notes, paper money is steadily losing its purchasing power. Being a popular agricultural commodity, soybean meal futures can serve as an effective hedge against inflation since the value increases with rising inflation.
Speculation: Most traders in the soybean meal futures market are in the game purely for speculation. They are not trying to hedge or diversify any portfolio. Their only aim is to benefit from the fluctuations in soybean meal prices.
How to Trade Soybean Meal Futures
While you can trade soybean meal CFDs and options on futures, the best way to play the soybean meal market is by trading soybean meal futures contracts. The futures contract is offered by the Chicago Mercantile Exchange (CME) Group, and through the CME Globex electronic trading platform, it can be traded from any part of the world.
A soybean meal futures contract is equivalent to 100 Short Tons, which is approximately 91 metric tons of soybean meal. The contract normally expires on the 15th day in the months of January, March, May, July, August, September, October, and December. At expiration, the contract is settled by physical delivery. To prevent taking or making a delivery of the commodity, you can rollover to the next expiration month.
It doesn’t take much to start trading soybean meal futures. You only need to create an account with the exchange through your futures broker and deposit the required margin. Since futures are leveraged instruments, you must not have the dollar worth of a contract before you can trade it. However, while the leverage can help you make more money, it can also make you lose more.
In addition to the CME Group, soybean meal futures contract is offered on the Dalian Commodity Exchange in China, which is a major hub for the commodity in East Asia.
Soybean Meal Futures Trading Strategies
The soybean meal futures market is perhaps not the most common futures market to build a trading strategy for, but it’s still a great market to trade. It’s not too difficult, and you will be able to find trading strategies fairly quickly, when compared to other more difficult markets.
If you’re looking for edges and ideas to build your own trading strategy, we recommend that you have a look at our edge membership!
Soybean Meal Futures Seasonality
The Soybean meal market has the same seasonal tendencies as the soybean futures market. Below is a chart of the seasonal tendencies of soybeans.
Factors That Affect Soybean Meal Futures
A lot of factors can influence the price of soybean meal futures, and they include the following:
Soybean prices: Soybean meal is produced from soybeans, so the price of soybeans will always affect the price of soybean meal. When soybean prices are high, the price of soybean meal will increase, and when soybeans price is low, soybean meal prices will decline.
China’s demand for soybean meal: China is the biggest producer of livestock and the highest consumer of soybean meal in the world, so its demand for soybean meal can affect prices.
Alternative oil meals: The more abundant the alternative oil meals, such as castor meal, rapeseed meal, linseed meal, and cottonseed meal, are, the weaker the demand for soybean meal.
U.S. Soybean Exports: Soybean meal export data indicate oversea demand for the commodity, so it can influence the price of the commodity.
Other key reports: Certain market reports significantly move soybeans prices, and they include:
- Feed grains demand outlook
- the USDA World Agricultural Supply and Demand Estimate (WASDE) Report, which forecasts the demand and supply from various regions
- the USDA Prospective Planting Report, which indicates the crop farmers prefer to plant
- Grain Stocks Reports, which offers updates on stocks of soybeans
- Crop Production Reports
Soybean meal is the part of soybeans left after the oil has been extracted. It is mostly used in making livestock feed, but it’s also an important protein source for vegan diets. Soybean meal futures contract is offered by the CME Group and the Dalian Commodity Exchange.
Here is our archive with articles about other tradeable futures markets.
What are the main uses of soybean meal?
Soybean meal is predominantly used as a protein supplement in livestock and poultry feed. It constitutes about 98 percent of soybean meal production globally and is utilized in animal feed such as pet feed, poultry feed, livestock feed, and fish feed. Additionally, soybean meal is the base for various human consumption products like tofu, tempeh, soy milk, and soy sauce.
How can soybean meal futures be traded?
Soybean meal futures contracts are traded on the Chicago Mercantile Exchange (CME) Group through the CME Globex electronic trading platform. Each contract is equivalent to 100 Short Tons, with expiration dates in January, March, May, July, August, September, October, and December. Physical delivery settles the contract at expiration.
How to start trading soybean meal futures?
To trade soybean meal futures, create an account with the exchange through a futures broker, deposit the required margin, and start trading. Soybean meal futures are leveraged instruments, allowing participation without the full contract value.