HEARD OF THE BOARD CRUSH?


The soybean crush is the process of converting soybeans into bean oil and meal. Soybeans are dried, cleaned and cracked to remove the hull, cooked and rolled into flakes which are then soaked in a solvent to extract the oil, and then distilled to remove the solvent and produce soybean oil. The resulting soybean flakes are dried and ground into meal. Meal is high in protein and used in animal feed rations whereas soybean oil is mainly used for cooking, but has a growing demand from the bio-diesel sector.


The crush spread is the difference between the value of soybeans and it’s by-products, and ultimately the processing margin that can achieved by the crushers. This is commonly referred to as the Gross Processing Margin (GPM).


Whilst all 3 products are related, they have their independent S+D factors and this inevitably means when their price relationship changes it directly impacts the gross processing margin that crushers can achieve. This GPM can vary tremendously, an example of which is the last 12months on the CBOT July 24 board crush (Chart 1).


Chart 1


Source: ICE Connect


10 | ADMISI - The Ghost In The Machine | Q2 Edition 2024


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