Crush Spreads

The soybean crush spread is the difference between the value of soybean meal and soybean oil produced from soybeans and the cost of the soybeans themselves. Processors "crush" soybeans to extract oil (used in cooking and biofuels) and meal (a high protein animal feed). The crush spread approximates their gross processing margin. Like the crack spread in oil, it lets processors hedge their margins and lets traders bet on the economics of soybean processing.

The products#

One bushel of soybeans (60 pounds) yields roughly:

• About 44 pounds of soybean meal (high protein, around 48%).
• About 11 pounds of soybean oil.
• The remainder is hulls and moisture.

These yields vary with processing plants and bean quality, but these are the conventional numbers used to calculate the board crush.

Units#

The board crush formula#

crush ($ per bushel) = meal ($ per ton) × 0.022 + oil (cents per pound) × 0.11 - soybeans ($ per bushel)

• Meal: 44 pounds per bushel = 0.022 short tons; multiply the meal price ($ per ton) by 0.022.
• Oil: 11 pounds per bushel; multiply the oil price ($ per pound) by 11 (or cents per pound by 0.11 to get dollars).
• Soybeans: price in dollars per bushel.

Contract ratios#

To balance the legs, CBOT and traders use ratios. A commonly cited balanced crush is 10 soybean contracts against 11 meal contracts and 9 oil contracts. CME lists the crush as a spread product so the legs can be traded together.

Crush and reverse crush#

Naming conventions vary: processors hedging their margin typically buy soybeans and sell products, locking in the current crush.

What moves the crush#

• Demand for meal: livestock and poultry feeding, especially exports.
• Demand for oil: food use and especially renewable diesel and biodiesel. Growth in US renewable diesel capacity in the early 2020s lifted soybean oil's share of crush value.
• Soybean supply: harvest size in the US, Brazil and Argentina. See Soybeans.
• Argentina's exports: Argentina is a leading exporter of soybean meal and oil, so its policies and crops affect global product prices.
• Processing capacity: new crushing plants increase competition for beans.
• Seasonality: harvest timing affects bean availability. See Seasonality in Commodities.

Oil share#

Traders watch "oil share", the percentage of crush value coming from oil:

oil share = oil value / (oil value + meal value)

In the example, 5.28 / 13.64 ≈ 39%. Rising oil share reflects strong vegetable oil and biofuel demand relative to feed demand.

Risks#

• Yield assumptions: actual plant yields differ from the board formula.
• Basis risk: local cash prices differ from futures. See Basis and Basis Trading.
• Policy risk: biofuel mandates and trade policies can shift oil demand quickly.
• Expiry mismatches across the three contracts. See Contract Months and Expiration.

Frequently asked questions#

What is the soybean crush spread?#

The difference between the combined value of soybean meal and oil produced from a bushel of soybeans and the cost of the soybeans, representing processing margins.

How is the board crush calculated?#

Meal price × 0.022 plus oil price (cents per pound) × 0.11, minus the soybean price per bushel.

What is oil share?#

The share of total crush value that comes from soybean oil, used to track the balance between vegetable oil and meal demand.

You have finished the Futures track. Continue with currencies, starting with Currency Pairs: Majors, Minors and Exotics.