Soybean Oil's Rising Value: How Renewable Fuels Are Reshaping Soybean Crush Revenues

Understanding Soybean Oil Share

• 💡 Soybean oil share refers to the relative value of soybean oil within the total revenue generated from crushing soybeans.
• 🎯 Soybeans are processed to produce two main components: soybean oil and soybean meal.

Historical vs. Current Market Drivers

• 🔑 Historically, the demand for soybean meal, a high-protein ingredient for animal feed, was the primary driver of soybean crushing.
• 🚀 In recent years, global biofuel policy has significantly increased the demand for soybean oil, making it the dominant factor in U.S. soybean crushing.
• 📊 Although soybean oil constitutes only 20% of a soybean's output by weight (11 lb oil per 60 lb bushel), its value share of crushing revenue has surged.

The Surge in Soybean Oil Value

• 📈 The soybean oil share of crushing revenue surpassed 50% in recent months, a dramatic increase from lows of just over 25% in 2014 and 28% in 2020.
• ⚠️ This shift is largely attributed to ambitious renewable fuel policies, with a notable policy released in June 2025.

Trading and Hedging Soybean Oil Share

• ⚙️ Traditionally, traders approximated soybean oil share by trading ratios of soybean oil and soybean meal futures.
• ⚡ Market participants can now utilize the CME soybean oil share index to trade futures and options, offering precise exposure to the relative value of soybean oil to meal.
• 💰 This index allows for saving margin and provides a more direct way to hedge against volatility in this evolving market.