Soybean Crush Margin Calculator
This tool calculates the gross margin (often called the "crush spread") obtained by crushing one bushel of soybeans into its primary products: soybean meal and soybean oil. It's a key metric in the agricultural commodity markets.
Enter the current market prices for Soybeans (per bushel), Soybean Meal (per ton), and Soybean Oil (per pound) to calculate the theoretical crush margin. Standard industry yields are used for the calculation.
Enter Commodity Prices
Understanding the Soybean Crush Margin
What is the "Crush"?
The "crush" refers to the process where soybeans are processed (crushed) to separate them into soybean meal and soybean oil. These products are widely used: meal primarily as animal feed, and oil for food products (like cooking oil) and biodiesel.
What is the Crush Margin (or Crush Spread)?
The crush margin is the theoretical gross profit a processor makes from crushing one unit (typically a bushel) of soybeans. It's calculated as the market value of the products (meal and oil) minus the cost of the raw material (soybeans).
It's a forward-looking indicator used by processors, traders, and farmers to understand the profitability of soybean processing and to inform hedging strategies.
Soybean Crush Margin Formula
The formula calculates the margin per bushel of soybeans. It uses standard conversion factors for how much meal and oil are typically produced from one bushel.
Standard Industry Yields (Approximate):
- 1 Bushel of Soybeans (~60 lbs) yields about:
- 47.5 pounds of Soybean Meal
- 11 pounds of Soybean Oil
Formula using common units ($/bushel for Soybeans, $/ton for Meal, $/pound for Oil):
Crush Margin ($/bu) = (Soybean Meal Price ($/ton) / 2000 lbs/ton * 47.5 lbs/bu) + (Soybean Oil Price ($/lb) * 11 lbs/bu) - Soybean Price ($/bu)
Simplified Calculation:
Crush Margin ($/bu) = (Soybean Meal Price ($/ton) * 0.02375) + (Soybean Oil Price ($/lb) * 11) - Soybean Price ($/bu)
(Note: 0.02375 = 47.5 lbs/bushel / 2000 lbs/ton)
Example Calculation
EX: Calculate the crush margin with the following prices:
- Soybean Price: $12.00 / bushel
- Soybean Meal Price: $370.00 / ton
- Soybean Oil Price: $0.35 / pound
Meal Value per bushel = $370.00/ton / 2000 lbs/ton * 47.5 lbs/bushel = $8.7875 / bushel
Oil Value per bushel = $0.35/lb * 11 lbs/bushel = $3.85 / bushel
Total Product Value per bushel = $8.7875 + $3.85 = $12.6375 / bushel
Crush Margin = Total Product Value - Soybean Price
Crush Margin = $12.6375 - $12.00 = $0.6375 / bushel
Result: The crush margin is approx. $0.64 per bushel.
Soybean Crush Margin Examples
Here are some examples demonstrating the calculation with different market prices. Click to see the steps.
Example 1: Positive Margin
Scenario: Strong demand for meal and oil creating a profitable crush.
1. Known Values:
- Soybean Price: $13.00 / bushel
- Soybean Meal Price: $400.00 / ton
- Soybean Oil Price: $0.45 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($400 / 2000) * 47.5 = $9.50 / bushel
Oil Value = $0.45 * 11 = $4.95 / bushel
Total Product Value = $9.50 + $4.95 = $14.45 / bushel
3. Calculate Crush Margin:
Crush Margin = Total Product Value - Soybean Price
Crush Margin = $14.45 - $13.00 = $1.45 / bushel
Conclusion: A positive crush margin of $1.45 per bushel indicates theoretical profitability.
Example 2: Zero Margin (Break-even)
Scenario: Market prices align for a theoretical break-even crush.
1. Known Values:
- Soybean Price: $14.00 / bushel
- Soybean Meal Price: $430.00 / ton
- Soybean Oil Price: $0.4227 / pound (Carefully chosen for break-even)
2. Calculate Product Values per Bushel:
Meal Value = ($430 / 2000) * 47.5 = $10.2175 / bushel
Oil Value = $0.4227 * 11 = $4.6497 / bushel
Total Product Value = $10.2175 + $4.6497 = $14.8672 / bushel
3. Calculate Crush Margin:
Crush Margin = Total Product Value - Soybean Price
Crush Margin = $14.8672 - $14.00 ≈ $0.8672 / bushel (Note: This shows the sensitivity to small price changes near break-even. A slight shift in oil price would change the margin.)
Let's correct the Oil Price slightly for a closer break-even: Oil Price: $0.344 / pound
Meal Value = ($430 / 2000) * 47.5 = $10.2175 / bushel
Oil Value = $0.344 * 11 = $3.784 / bushel
Total Product Value = $10.2175 + $3.784 = $14.0015 / bushel
Crush Margin = $14.0015 - $14.00 = $0.0015 / bushel
Conclusion: A margin very close to zero indicates a theoretical break-even point before other processing costs.
Example 3: Negative Margin
Scenario: High soybean costs relative to meal and oil prices, resulting in a theoretical loss.
1. Known Values:
- Soybean Price: $15.00 / bushel
- Soybean Meal Price: $390.00 / ton
- Soybean Oil Price: $0.38 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($390 / 2000) * 47.5 = $9.2625 / bushel
Oil Value = $0.38 * 11 = $4.18 / bushel
Total Product Value = $9.2625 + $4.18 = $13.4425 / bushel
3. Calculate Crush Margin:
Crush Margin = Total Product Value - Soybean Price
Crush Margin = $13.4425 - $15.00 = -$1.5575 / bushel
Conclusion: A negative crush margin of approx -$1.56 per bushel suggests that, theoretically, crushing at these prices would incur a gross loss.
Example 4: Higher Oil Price Impact
Scenario: How a significant increase in oil price affects the margin, keeping others constant from Example 1.
1. Known Values:
- Soybean Price: $13.00 / bushel (Same as Ex 1)
- Soybean Meal Price: $400.00 / ton (Same as Ex 1)
- Soybean Oil Price: $0.60 / pound (Increased)
2. Calculate Product Values per Bushel:
Meal Value = ($400 / 2000) * 47.5 = $9.50 / bushel
Oil Value = $0.60 * 11 = $6.60 / bushel
Total Product Value = $9.50 + $6.60 = $16.10 / bushel
3. Calculate Crush Margin:
Crush Margin = $16.10 - $13.00 = $3.10 / bushel
Conclusion: Compared to Example 1 ($1.45 margin), the higher oil price significantly boosted the crush margin to $3.10.
Example 5: Lower Meal Price Impact
Scenario: How a decrease in meal price affects the margin, keeping others constant from Example 1.
1. Known Values:
- Soybean Price: $13.00 / bushel (Same as Ex 1)
- Soybean Meal Price: $350.00 / ton (Decreased)
- Soybean Oil Price: $0.45 / pound (Same as Ex 1)
2. Calculate Product Values per Bushel:
Meal Value = ($350 / 2000) * 47.5 = $8.3125 / bushel
Oil Value = $0.45 * 11 = $4.95 / bushel
Total Product Value = $8.3125 + $4.95 = $13.2625 / bushel
3. Calculate Crush Margin:
Crush Margin = $13.2625 - $13.00 = $0.2625 / bushel
Conclusion: The lower meal price reduced the crush margin from $1.45 (Example 1) to approx $0.26.
Example 6: Lower Soybean Price Impact
Scenario: How a decrease in soybean price affects the margin, keeping products constant from Example 1.
1. Known Values:
- Soybean Price: $11.00 / bushel (Decreased)
- Soybean Meal Price: $400.00 / ton (Same as Ex 1)
- Soybean Oil Price: $0.45 / pound (Same as Ex 1)
2. Calculate Product Values per Bushel:
Meal Value = ($400 / 2000) * 47.5 = $9.50 / bushel
Oil Value = $0.45 * 11 = $4.95 / bushel
Total Product Value = $9.50 + $4.95 = $14.45 / bushel
3. Calculate Crush Margin:
Crush Margin = $14.45 - $11.00 = $3.45 / bushel
Conclusion: The lower soybean cost significantly increased the crush margin from $1.45 (Example 1) to $3.45.
Example 7: Mid-Range Prices
Scenario: Calculating margin with average market prices.
1. Known Values:
- Soybean Price: $10.50 / bushel
- Soybean Meal Price: $360.00 / ton
- Soybean Oil Price: $0.32 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($360 / 2000) * 47.5 = $8.55 / bushel
Oil Value = $0.32 * 11 = $3.52 / bushel
Total Product Value = $8.55 + $3.52 = $12.07 / bushel
3. Calculate Crush Margin:
Crush Margin = $12.07 - $10.50 = $1.57 / bushel
Conclusion: These mid-range prices yield a positive crush margin of $1.57 per bushel.
Example 8: Weak Oil Market
Scenario: A market where oil prices are particularly low.
1. Known Values:
- Soybean Price: $12.80 / bushel
- Soybean Meal Price: $410.00 / ton
- Soybean Oil Price: $0.28 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($410 / 2000) * 47.5 = $9.7375 / bushel
Oil Value = $0.28 * 11 = $3.08 / bushel
Total Product Value = $9.7375 + $3.08 = $12.8175 / bushel
3. Calculate Crush Margin:
Crush Margin = $12.8175 - $12.80 = $0.0175 / bushel
Conclusion: The low oil price results in a very tight, near-zero crush margin of approx $0.02.
Example 9: Strong Meal Market
Scenario: A market where meal prices are exceptionally high.
1. Known Values:
- Soybean Price: $13.50 / bushel
- Soybean Meal Price: $450.00 / ton
- Soybean Oil Price: $0.35 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($450 / 2000) * 47.5 = $10.6875 / bushel
Oil Value = $0.35 * 11 = $3.85 / bushel
Total Product Value = $10.6875 + $3.85 = $14.5375 / bushel
3. Calculate Crush Margin:
Crush Margin = $14.5375 - $13.50 = $1.0375 / bushel
Conclusion: The high meal price helps maintain a positive crush margin of approx $1.04.
Example 10: Simultaneous High Product Prices
Scenario: A favorable market for both meal and oil.
1. Known Values:
- Soybean Price: $14.00 / bushel
- Soybean Meal Price: $420.00 / ton
- Soybean Oil Price: $0.50 / pound
2. Calculate Product Values per Bushel:
Meal Value = ($420 / 2000) * 47.5 = $9.975 / bushel
Oil Value = $0.50 * 11 = $5.50 / bushel
Total Product Value = $9.975 + $5.50 = $15.475 / bushel
3. Calculate Crush Margin:
Crush Margin = $15.475 - $14.00 = $1.475 / bushel
Conclusion: High prices for both products result in a healthy crush margin of approx $1.48.
Frequently Asked Questions about Soybean Crush Margin
1. What is the soybean "crush spread"?
The "crush spread" is another term for the soybean crush margin. It represents the difference between the market value of the products obtained from crushing soybeans (meal and oil) and the cost of the soybeans themselves.
2. Why is the crush margin important?
It's a key indicator of the profitability of soybean processing. Crush plants use it to decide whether to increase or decrease crushing activity. Traders use it to speculate on the relative values of soybeans, meal, and oil, and farmers may consider it when deciding whether to sell beans or hold them.
3. What units are used for the prices?
Typically, soybeans are priced in dollars per bushel ($/bu), soybean meal in dollars per ton ($/ton), and soybean oil in dollars per pound ($/lb) or cents per pound (c/lb). This calculator uses the standard $/bu, $/ton, and $/lb units as inputs and outputs the margin in $/bushel.
4. What are the standard yields used in the calculation?
The calculator uses approximate industry standard yields: 1 bushel of soybeans yields about 47.5 pounds of soybean meal and 11 pounds of soybean oil. These can vary slightly in practice.
5. Does this margin represent the processor's actual profit?
No, the crush margin is a *gross* theoretical margin. A processor's actual profit is affected by many other costs, including energy, labor, transportation, financing, and other operating expenses. A positive crush margin suggests potential profitability before these costs are factored in.
6. What causes the crush margin to change?
Changes in the market prices of soybeans, soybean meal, and soybean oil. If the prices of meal and oil rise faster than the price of soybeans, the margin increases. If the price of soybeans rises faster than the prices of meal and oil, the margin decreases.
7. Can the crush margin be negative?
Yes. A negative margin means that the combined market value of the meal and oil produced from a bushel of soybeans is less than the cost of the bushel of soybeans. In theory, processing would be unprofitable at that moment, leading processors to potentially slow down or halt operations if the margin remains negative.
8. How is the crush margin traded?
The crush margin itself is a theoretical value, but traders can effectively "trade the crush" using futures contracts. They might buy soybean futures and sell equivalent amounts of soybean meal and soybean oil futures (a "crush spread" trade) if they expect the margin to widen, or vice versa if they expect it to narrow.
9. Are the conversion factors (47.5 lbs meal, 11 lbs oil per bushel) always exact?
No, these are standard approximations. Actual yields can vary slightly depending on the quality of the soybeans, the efficiency of the processing plant, and the specific products being made. However, these standard numbers are widely used for calculating the theoretical crush margin.
10. How does this calculator handle different units?
The calculator assumes the common industry units as specified ($/bushel for Soybeans, $/ton for Meal, $/pound for Oil) and uses the appropriate conversion factors within the calculation (dividing meal price by 2000 to convert tons to pounds, then multiplying by pounds per bushel; multiplying oil price by pounds per bushel). The final output is always in $/bushel.
