Enter the soybean meal price ($ per short ton), the soybean oil price (cents per pound), and the soybean price ($ per bushel) into the calculator to determine the soybean crush margin.
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Soybean Crush Margin Formula
The following equation is commonly used to estimate the “board crush” margin per bushel using standard futures units (meal in $/short ton, oil in cents/lb, soybeans in $/bushel).
CM = SM * 0.022 + SO * 0.11 - SB
- Where CM is the soybean crush margin ($/bushel)
- SM is the soybean meal price ($/short ton)
- SO is the soybean oil price (cents/lb)
- SB is the soybean price ($/bushel)
What is a Soybean Crush Margin?
Definition:
A crush spread is a commodity trading strategy in which the trader takes long positions in soybean meal futures and soybean oil futures against a short position in soybean futures to establish a processing margin.[1]
How to Calculate Soybean Crush Margin?
Example Problem:
The following example outlines the steps and information needed to calculate Soybean Crush Margin.
First, determine the soybean meal price. In this case, the soybean meal is being traded at $340 per short ton.
Next, determine the soybean oil price. For this example problem, the soybean oil is being traded at 44 cents per pound.
Next, determine the soybean price. For this example, the soybean is being traded at $10.20 per bushel.
Finally, calculate the crush margin using the formula above:
CM = SM * 0.022 + SO * 0.11 - SB
CM = 340 * 0.022 + 44 * 0.11 - 10.20
CM = 7.48 + 4.84 - 10.20
CM = $2.12/bushel
