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The soybean crush spread has been consolidating within a symmetrical triangle since 2023. As it nears the apex of this multi-year pattern, a significant price move appears increasingly likely.

Soybean meal has continued to trend lower in 2025, consistent with its multi-year downtrend. While prices are testing upper resistance, failure to break out could signal a continuation of the broader bearish trajectory.

The cattle crush (excluding corn) has been trading within a descending rectangle pattern since peaking in 2023, suggesting persistent downward pressure with limited upside momentum.

Corn has failed to reclaim its former support-turned-resistance level at the start of 2025 and appears to be resuming its broader downtrend.

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Economists were caught off guard when the U.S. Consumer Confidence Index posted its largest monthly gain in four years, snapping a five-month streak of declines. The sharp rebound was closely linked to renewed optimism following a temporary truce in the tariff frictions between the U.S. and China. While the improvement was broad-based across all age and income groups, we remain cautious, especially considering the survey’s cut-off date preceded President Trump’s announcement of a 50% tariff on the European Union. Though that announcement was delayed two days later, the back-to-back headlines spurred notable market volatility.

As always, we seek opportunities beyond the immediate headlines. And with the planting season for corn and soybeans in full swing, a retreat to the farm seems especially timely.

There are multiple signs pointing to a strong production year. In contrast to last year’s drought-stricken conditions across the Corn Belt, this season’s weather outlook is significantly more favorable. Heavy rains have supported crop development and accelerated planting progress. The most recent Crop Progress report for the 2025 growing season shows the planting of corn and soybean and crop emergence are well ahead of the five-year average. Reflecting these improvements, the USDA and other forecasting agencies are now projecting record U.S. corn and soybean harvests for 2025. In addition, large crop expectations from South American producers, particularly Brazil and Argentina, are expected to further boost global supply.

What makes corn and soybeans especially interesting is their role in crush spreads? U.S. soybeans are primarily crushed into soybean meal and oil. Since the output ratio of the crushing process is fixed, traders can calculate the soybean crush spread to assess whether it’s more profitable to sell raw soybeans or process them into derivatives. Lately, the spread has been supported by strong demand for soybean oil. The irony, however, is that oil makes up only about one-fifth of the soybean; the remainder becomes meal, which is mostly used as livestock feed. As more soybeans are crushed to satisfy oil demand, meal supplies balloon; placing downward pressure on meal prices.

A parallel dynamic plays out in cattle feeding. Feedlot operators purchase feeder calves and raise them to be sold as finished cattle. Because corn makes up a significant portion of feed, it’s typically included in the cattle crush spread. While the exact amount of corn needed to fatten a calf varies, the spread still offers valuable insights. Ongoing downward pressure on the spread signals shrinking profit margins, prompting farmers to sell feeder cattle early rather than incur higher feed costs. Moreover, with feeder cattle supplies already tight, demand for corn is likely to remain subdued.

Taken together, rising crop supplies and softening feed demand point to a textbook setup for lower prices. While macro headlines have dominated market attention, the real story may be unfolding quietly in the fields where supply and demand dynamics are shifting decisively.

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We conclude with the following hypothetical trades:¹

Case study 1: Short Micro Soybean Meal

If we hold the view that soybean meal price will fall, we would consider taking a short position in the Micro Soybean Meal futures (MZMQ5) at the hypothetical price level of 300, with a stop-loss above 310, a hypothetical maximum loss of 310 – 300 = 10 points. Looking at Figure 2, Soybean Meal has the potential to trace back to its support level at 275 and subsequently 255, resulting in 300 – 275 = 25 points and 300 – 255 = 45 points, respectively. Each Micro Soybean Meal futures contract represents 10 short tons, and each point move is 10 USD. The standard Soybean Meal futures contract is also available at 100 short tons.

Case study 2: Short Micro Corn

If we hold the view that corn price will fall, we would consider taking a short position in Micro Corn futures (MZCN5) at the hypothetical price level of 460, with a stop-loss above 475, a hypothetical maximum loss of 475 – 460 = 15 points. Looking at Figure 4, Soybean Meal has the potential to trace back to its previous level at 400, resulting in 460 – 400 = 40 points. Each Micro Corn futures contract represents 500 bushels, and each point move is five USD. The standard Corn futures contract is also available at 5000 bushels.

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¹ Examples cited above are for illustration only and shall not be construed as investment recommendations or advice. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. Please refer to full disclaimers at the end of the commentary.

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