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Soybean Meal Price Trends

by 5m Editor
9 February 2012, at 12:00am

Long–term, seasonal and anticipated future trends for soybean meal prices are provided by John Bancroft, Market Strategies Program Lead in the Pork News and Views newsletter from the Ontario Ministry of Food and Rural Affairs (OMAFRA) to help producers with their future purchasing.

The following information provides a current picture of the long term, seasonal, and anticipated future trends for soybean meal. It can be used along with current market information from other sources (i.e. market analyst, brokers, suppliers) to make market decisions on your soybean meal needs.

Graph #1 provides a historical trend from 2007 to 2011 and a future snapshot for 2012 of soybean meal values. The weekly average soybean meal prices used are based on the Hamilton prices plus $20 (handling and trucking) per tonne.

A few observations from the Graph #1 are:

  • The red line is the average value from 2007 to 2011 ($412/tonne)
  • The two green lines mark the range from $375 to $450 per tonne; in the last 5 years, this is the range the value fell into 49 per cent of the time
  • Values ranged from a weekly low of $278 in April 2007 and a weekly high of $609 in September 2009.

The snapshot of the 2012 future values represented by the orange line in Graph #1 are based on the daily closing Chicago Mercantile Exchange (CME) soybean meal futures and CME Canadian dollar futures on December 29, 2011. A calculated five (5) year average adjusted basis was used in the formula below to arrive at the estimated future values.

Estimated future value (C$/tonne) = Closing CME Soybean Meal futures price (US$/ton) ÷ 0.90719 (conversion to tonnes) ÷ Closing CME Canadian Dollar Value (conversion to Canadian $) + 5 Year Avg. Adjusted Basis (C$/tonne).

It must be remembered these estimated values are a point in time snapshot (market close on 29 December 2011) that will change daily as the market responds to new market information. It is important to be aware of the current trending (up, down, sideways) of the market. Estimated future values are intended as a guide to converted CME soybean meal future prices and do not represent a purchase/ sale value. The trend of the future price and basis values could be impacted by a variety of market influences such as:

  • local supply and demand for soybean meal
  • US and world supply and demand for soybean meal
  • soybean and soybean oil supply and demand
  • transportation and interest costs
  • US soybean meal exports
  • exchange rates
  • livestock inventory trends
  • wild cards (i.e. outside markets).

Graph #2 provides a seasonal picture of soybean meal values. It shows the weekly average values for 2011 compared to the 5 year average weekly values from 2007 to 2011.

A few observations from Graph #2 are:

  • Tendency to move lower during March and April, mid-summer and at harvest time
  • Tendency to move higher during June and July and again August and September
  • Keep in mind it is a five-year average and a current year’s seasonal trend can vary depending on what is impacting the current market versus what has happened in the past

Table #1 provides an analysis of the weekly soybean meal values from 2007 to 2011. It shows the percentage of time the soybean meal values were within the indicated price ranges per tonne.

Table 1. Soybean meal values (2007-2011)
Price Range
(C$/tonne)
# of Weeks % of Time % of Time
< $350 51 20% 28%
$350 to $375 21 8%
$376 to $400 35 13% 49%
$401 to $425 58 22%
$426 to $450 34 13%
$451 to $475 19 7% 23%
$476 to $500 18 7%
> $500 24 9%
Total 260 100%

A few observations are:

  • 28 per cent of the time value was less than $375
  • 49 per cent of the time value was between $375 and $450
  • 23 per cent of the time value was greater than $450

Compare the analysis in Table #1 with Graph #1 to see when values occurred:

  • the majority of the values greater than $450 occurred in 2008 and 2009
  • the majority of the values less than $375 occurred in 2007 with short dips in 2009, 2010 and 2011

When making your soybean meal purchase decisions, some questions to consider are:

  • What are your soybean meal needs – immediate, short term, long term?
  • When do you need to purchase soybean meal?
  • What is your storage situation?
  • What impact does the soybean meal price have on your ration costs and margin (i.e. market pig value – feeder pig value – feed cost)?
  • Are there alternative feeds that can be used as a substitute?
  • What are the current and forward prices being offered by your supplier?

The challenge is to consider the past market data and to use your current market information sources (i.e. market analyst, brokers, suppliers) to achieve your farm business goals when making your soybean meal purchase decisions.

February 2012