Understand soybean meal in one sentence

01. What is soybean meal?

Soybean meal is a by-product obtained by extracting soybean oil from soybeans. Also known as “soybean meal.”

02. Uses of soybean meal

Soybean meal is the most produced and widely used of 12 animal and vegetable oil meal feed products such as cottonseed meal, peanut meal, and rapeseed meal. As a type of high protein, soybean meal is the main raw material for livestock and poultry feed, and can also be used to make pastries, health foods, cosmetics, and antimicrobials.

03. What is the soybean meal industry chain?

Picture from Bullwire

04. Why pay attention to soybean meal?

As a by-product of soybean oil extracted from soybeans, soybean meal is also an important futures product. As a protein feed, it is a staple food for livestock and poultry, and is not easy to be replaced; as an important futures trading variety, its price fluctuations have a wide range of effects and great impact.

The factors affecting the price of soybean meal are complex and varied. Overall, the price of soybean meal is affected by macroeconomic environmental trends, the main fluctuation range is affected by the relationship between the supply and demand of soybean meal, and fluctuates due to surrounding related products or substitutes. In China, the main soybean production area is in Heilongjiang. Since soybeans are not considered a staple food, unlike corn, rice, or wheat, they enjoy the country's protective storage policies, and the area under cultivation is constantly decreasing. Soybean exporters — the United States, Brazil, and Argentina — experienced bad weather in 2012, causing soybean production to drop sharply. In July and August, the US Department of Agriculture lowered its soybean production forecast for two consecutive months, and soybean prices soared, which directly affected the domestic price of soybean meal in China. Since then, the price of soybean meal for pig feed in China has skyrocketed, and is even higher than the price of food and flour — staple foods on people's tables. On September 10, 2019, the Argentine government announced that China will import feed soybean meal from Argentina for the first time.

In 2023, the global supply environment is still in a tight pattern. Although Brazil's cultivation area and production have increased significantly, the sales ratio of soybean warehouses is still in a very tight pattern, and the global soybean supply and demand pattern is not relaxed. Furthermore, the Russian-Ukrainian conflict is still ongoing, which has had a major impact on the global grain market. Under the premise that the overall market environment is not relaxed and there is limited room for short-term improvement, there is always strong support for soybean prices below. We need to continue to pay attention to soybean cultivation in Brazil and Argentina in the first quarter of 2023. Currently, the dry climate in southern Brazil and the main production areas of Argentina has had a certain impact. If the impact continues to worsen, it will bring a certain upward trend to the soybean meal market at the beginning of the year. Even when the weather is stable, the downward trend is limited. From April to August, the market focus will return to the soybean cultivation situation. Since soybeans are already in a tight supply and demand pattern, if the weather leaves room for speculation, there will also be great potential for the market.