Soybean oil remains the most widely used edible oil in the United States, with consumption exceeding that of all other fats and oils combined. Bean oil is a major ingredient in cooking oil, margarine, mayonnaise, salad dressing, and shortening. Lecithin is a natural emulsifier derived from soybean oil, and without it, chocolate would separate from cocoa butter and spoil many a sweet moment. But soybeans -- derivatives like bean oil and meal -- have many other uses, too. They’re a central ingredient in livestock and poultry feeds, and they’re also an important ingredient in low-fat sources of protein, such as tofu, miso, and soymilk. Technical uses include adhesives, cleansing materials, polyesters, and other textiles.

Here are several examples of how soybean oil futures can be used by those seeking to mitigate price risk, as well as by speculators who hope to earn an attractive return on their investments:

* Risk Management for Processors -- A soybean processing plant can use soybean, soybean oil, and soybean meal futures to hedge its gross processing margin -- the difference between the cost of soybeans and the eventual revenue of the finished oil and meal. Buying soybean futures protects against rising input costs. And selling soybean oil and meal futures protects against falling prices for the later sales of meal and oil.

* Cost Management for Food Companies -- A large food manufacturer, which uses soybean oil in many of its bakery products, buys futures or call options to establish a cost ceiling for eventual soybean oil procurement. In the highly competitive food business, such risk-management strategies can give the company a competitive advantage in the marketplace.

* Profit Opportunities for Traders -- In hopes of realizing a profit, a California software developer decides to trade soybean oil futures. Based on fundamental news and technical analysis, he expects bean oil prices will rise, so he purchases soybean oil futures. Two weeks later, weather conditions reduce the soybean harvest forecast and bean oil prices rise. The speculator sells his futures contracts at a higher price and profits from the transaction. This participation in the futures market did not require the trader to have any direct link to farming or food production.

Available Trading Months: Principal trading months for soybean meal futures include January, March, May, July, August, September, October, and December.