Soybean Oilshare futures are a cash-settled derivative listed on the Chicago Board of Trade. These futures are based on the CME Soybean Oilshare Index® (codes COSI1-COSI9), which tracks the percentage of soybean crush revenue derived from soybean oil. The Soybean Oilshare Index® is calculated by dividing the daily settlement price of Soybean Oil futures by the combined value of both Soybean Oil and Soybean Meal futures, expressed in standardized units.
Soybean Oilshare futures are settled daily during the settlement period from 1:14 – 1:15 p.m. CT using a volume-weighted average price. Final settlement of Soybean Oilshare futures is determined by the relative value of the Soybean Oilshare Index®. Soybean Oilshare futures and options stop trading on the last Friday, at least two business days before the last business day of the month prior to the contract’s expiry month. However, Soybean Oil and Soybean Meal futures continue to trade into the expiration month.
These futures and options provide market participants a straightforward way to trade the relative value of Soybean Oil to Soybean Meal, offering more efficiency and lower margin costs than legging a spread between Soybean Oil and Soybean Meal futures. The contracts follow the specifications of Soybean Oil futures and options and include 15 monthly contracts, such as January, March, May, July, August, September, October, and December.
Understanding Soybean Crushing
What is Soybean Crushing?
Soybean crushing refers to the process of crushing whole soybeans to produce soybean meal and soybean oil. Soybean meal is primarily used as animal feed due to its high protein content, while soybean oil serves as a vegetable oil in various food, fuel, and industrial applications.
To compare the relative value of Soybean Oil and Soybean Meal, common units must be used. Soybean Oil futures are priced in cents per pound, Soybean Meal futures are priced in dollars per 2,000-pound short ton, and Soybean futures are quoted in 60-pound bushels. When a 60-pound bushel of soybeans is crushed, the result is typically 11 pounds of soybean oil, 44 pounds of 48% protein soybean meal, 4 pounds of hulls, and 1 pound of waste. The common method of comparison involves converting the Soybean Oil futures price to the price per 11 pounds and the Soybean Meal futures price to the price per 44 pounds, which represent the outputs of crushing one bushel of soybeans.
Calculating the Soybean Oilshare
How the Soybean Oilshare is Calculated
The CME Soybean Oilshare Index® represents the share of soybean crushing revenue attributed to soybean oil. This is determined using the daily settlement prices of Soybean Oil and Soybean Meal futures.
While Soybean Oil futures are officially quoted in cents per pound, they can also be expressed in dollars per hundredweight. For example, a price of 60.00 cents per pound can also be seen as $60 per hundredweight. To convert this to the price per 11 pounds of soybean oil (as produced from one bushel of soybeans), the price is multiplied by 0.11 (since 11 pounds is 11% of 100 pounds). Similarly, the Soybean Meal futures price is quoted per short ton (2,000 pounds), so to find the price per 44 pounds (the amount of soybean meal produced from one bushel of soybeans), the price is multiplied by 0.022 (since 44 pounds is 2.2% of 2,000 pounds).
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