Soybean Crush Flashcards
Soybean are processed into
Soybean meal and soybean oil
The crush spread is
The difference between the value of soybeans and its by products (soybean meal + soybean oil) - soybean price
The crush spread is considered a…
Guage of potential profit margin for soybean processors
In a crush spread what positions do the traders take?
The trader takes a long position in soybean futures against shirt positions on soybean meal and soybean oil futures. This is known as the Board crush
What is the board crush
When the trader takes a long position on soybean futures against short positions on soybean meal and oil futures
The value of the crush =
(Soybean oil futures + soybean meal futures) - soybean futures
Soybeans trade in
Bushels
Soybean meal trades in
Tons
Soybean oil trades in
Pounds
In order to perform an accurate calculation
The price of the three commodities need to be converted to a common unit
1 bushel of soybeans weighs how many pounds
60 pounds
Soybean futures are priced per bushel, so soybean futures price is…
Price per 60 pounds of soybeans
A bushel of soybeans produces how many pounds of soybean meal?
44 pounds of soybean meal
Soybean meal futures are priced per ton so
Multiplying the meal price by 0.022 represents the meal price per 44 pounds
A bushel of soybeans produces how many pounds of soybean oil
11 pounds
Multiply soybean oil price by
0.11 to get oil price per 11 pounds
Selling the crush means…
Selling soybean oil and soybean meal and buying soybeans.
Selling the crush is a trade typically used by…
Hedgers
Buying the crush is also known as
A reverse crush
Buying the crush means..
Buying soybean meal and soybean oil and selling soybeans
Buying the crush is a trade typically used by..
Traders who anticipate movements in the market that could make this a good strategy
