DCE Soy Meal Jan '23 (XUF23)

Description

Soybean meal is produced through processing and separating soybeans into oil and meal components. 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 a 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 at the CME Group. The CME 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 to the physical processing of soybeans and 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 - CME soybean meal futures prices (Barchart.com symbol ZM) on the nearest-futures chart in 2022 closed the year down -19.3% yr/yr at $386 per short ton.

Supply - World soybean meal production in 2023/24 is expected to rise by +4.8% yr/yr to a new record high of 258.592 million metric tons. The world's largest soybean meal producers are expected to be China, with 30.0% of world production in 2023/24, the US with 19.0%, Brazil with 16.1%, and Argentina with 10.7%.

US production of soybean meal in 2023/24 is expected to rise by +3.2% yr/yr to 54.154 million short tons, a new record high. US soybean meal ending stocks in 2023/24 are expected to rise by +7.8% yr/yr to 400,000 short tons.

Demand - World consumption of soybean meal in 2023/24 is expected to rise by +3.2% yr/yr to 253.732 million metric tons, a new record high. China is expected to account for 30.2% of that consumption, the US for 14.1%, and the European Union for 10.6%. US consumption of soybean meal in 2022/23 is expected to rise by +2.7% yr/yr to 35.765 million metric tons, a new record high.

Trade - World exports of soybean meal in 2023/24 are expected to rise by +4.3% yr/yr to a new record high at 69.836 million metric tons. Argentina is expected to account for 34.9% of total world exports, Brazil for 29.4%, and the US for 19.9%. World imports of soybean meal in 2023/24 are expected to rise by +6.0% yr/yr to 66.697 million metric tons, below the record high of 67.153 million metric tons in 2021/22. US exports of soybean meal in 2023/24 are expected to rise by +4.3% yr/yr to 15.300 million short tons, a record high. US imports of soybean meal in 2023/24 are expected to fall by -5.1% yr/yr to 600,000 short tons.

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