What is Soybean Meal?
Soybean meal is the most prominent protein source used as feed for farm animals. It represents over 65% of the total world output of protein feedstuffs. Its feeding value is incomparable to any other plant protein source and is the standard to which other sources of protein are compared. Soybean feed production accelerated significantly in the mid-1970s and then again in the early 1990s due to a growing demand from developing countries.
Soybean meal is the by-product of the extraction of soybean oil. There are several extraction processes and in the solvent extraction process, the soybeans are cracked, heated, flaked and the oil is extracted by solvent (usually hexane). The extracted flakes are then dried to eliminate the solvent, toasted and ground. There is also the mechanical process where the soybeans are cracked, dried, heated and fed to a mechanical press, and the resulting flakes are dried and ground. There are many variations of these processes.
Uses of Soybean Meal
Soybean meal is an ingredient in food sources for human and animal consumption. It is mainly as a protein supplement and as a source of metabolisable energy.
Risks of Soybean Meal
With such a large percentage of the overall production of soybean meal intended as animal feed, there needs to be a very strict production schedule with a large reliance on growing conditions. If growing conditions are affected or industry regulation influences production, then capacity can be disrupted and therefore disturb the production process.
Cultivation risks associated with growing commodities like soybeans are: low rain falls, insects, disease, temperature, wind and solar radiation. All these factors can affect the level of output a farm is able to produce hence affecting futures pricing of the soybean meal.