Annatto seeds can be found at spice markets, ethnic markets, and in the Mexican foods section of some grocery stores.
It might also be called achiote, but be careful because there are also spice mixes called achiote. You want the whole seeds rather than a spice mix or ground seeds.
1 cup of your favorite type of oil
1/2 cup annatto seeds
Heat the oil in a small heavy saucepan over medium heat.
Add up to 1/2 cup of annatto seeds (the more seeds, the more color) and stir constantly for about 5 minutes.
Don't overheat the oil - if the annatto seeds burn, the whole batch is ruined.
Take the pan off the heat and allow it to cool. Strain to remove the seeds.
Other instructions I've seen say that you should keep the oil refrigerated between uses. I've left it in the pantry on occasion, but I tend not to make more than I'm going to use in a day or two. For safety, refrigerate yours.
You can certainly make any quantity you need; just keep to the ratio of 2 parts oil to 1 part (or less) annatto seeds. It simple enough that you can make exactly the amount you need whenever you need it.