Soybean Meal is produced through processing and separating Soybeans into oil and meal components. By weight, Soybean Meal accounts for about 35% of the weight of raw Soybeans (at 13% moisture). 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 the 48% protein minimum.
Soybean Meal has become the world’s choice for protein supplement due to its high protein levels, amino acid balance, and overall nutrient content. It 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.
Soybean Meal futures provide a way to effectively manage the price risk that Soybean Meal merchandisers, food processors, livestock operations, importers and others have related to the purchase or sale of Soybean Meal. Futures contracts provide opportunities to identify short and long-term cyclical price and volatility patterns. Soybean Meal futures traders are able to take advantage of arbitrage and spread opportunities with other commodities, including related grains, oilseeds and livestock.
The Soybean Meal contract trades at the Chicago Board of Trade (CBOT), part of the CME Group. The electronic futures contract trades on Globex from 7:00 PM CT to 7:45 AM Sunday through Friday. As well as the primary hours of 8:30 AM CT to 1:20 PM Monday through Friday.
One Soybean Meal futures contract is 100 short tons, or approximately 91 metric tons. The previous settlement price (October 15, 2012) for December 2012 Soybean Meal futures was 456.1, or $45,610 per contract. The most common contract symbol is ZM.
One futures contract price increment or “tick” is 10 cents per short ton. A one “tick” move is $10.00. The next tick after 456.1 downward is 456.0 followed by 455.9. Therefore, a price move from 456.1 to 455.1 is $100.
The performance bond or initial margin requirement to initiate one futures contract position is $2,420 (as of November 11, 2015). To control that futures position going forward the maintenance margin is $2,200 (as of November 11, 2015).
The Daily Price limit is $20 per short ton, expandable to $30, when the market closes at limit bid or limit offer. For example, if the market closes at limit offer, or 436.1, on Tuesday, October 16, 2012, the next session’s Daily Price Limit would increase to $30. If the following trading session fails to close at the limit, the next session’s Daily Price Limit reverts to the $20 cap. The exchange resets daily limits for Soybean Meal in May and November of each year, based on a percentage of the average settlement price of benchmark contracts during a roughly nine-week observation period.
The Soybean Meal marketing year begins in October and ends in September. The futures contract month listings are January (F), March (H), May (K), July (N), August (Q), September (U), October (V), and December (Z).
The futures contract’s Last Trading Day (LTD) is the business day prior to the 15th calendar day of the contract month. The December 2012 Soybean Meal futures contract LTD is December 14, 2012 for example. The First Notice Day (FND) for that same contract is November 30, 2012.
Significant fundamental reports to be aware of are the United States Department of Agriculture (USDA) Crop Progress reports, typically released at 3:00 PM CT on Monday’s, and the periodic Crop Production and USDA Supply/Demand reports, typically released at 11:00 AM CT.
Visit https://www.danielstrading.com/ for additional contract specifications and market information regarding the Soybean Meal futures market.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.