Paradigm Shifts: Can We Meet the Challenge? How Much Soybean Oil Can We Produce and How Fast Can We Produce It?

Aviation Fuel (Sustainable Aviation Fuel (SAF)), BioRefineries/Renewable Fuel Production, Business News/Analysis, Feedstocks, Field/Orchard/Plantation Crops/Residues, Funding/Financing/Investing, Marketing/Market Forces and Sales, Opinions

June 21, 2022

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by Pete Moss (Biobased Diesel Daily/Frazier, Barnes & Associates) … As announcements for new renewable diesel projects begin to taper off, notifications of new soybean-crushing facilities seemingly occur on a weekly basis. This requires a fight for acres, manufacturing capacity and feedstock. In the end, the market will decide who wins and loses.

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There are currently eight or more new U.S. soybean processing plants that have been announced, plus numerous expansions at existing crushing plants that are underway but not publicly disclosed.

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Keep in mind that soybeans yield approximately 20 percent oil and 75 percent meal, so there will be a significant amount of high-protein soybean meal entering the market in the next few years. Four-hundred-million gallons of soybean oil sounds like a significant amount, and it will certainly be more than that with existing plant expansions, but from a macroeconomic view, it is a drop in the bucket. Soybean-oil futures recently reached a record 90 cents per pound, yet its use for biofuels shows no slowing down.

Soybean oil used for biofuel, relative to the amount produced, has eclipsed the 40-percent threshold for the first time ever. In other words, 41 percent of all soybean oil produced goes toward biofuel use, and that percentage is increasing.

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The increase in renewable diesel and sustainable aviation fuel production highlights the critical issue of soybean-oil supply and the ability of the market to adapt. In the next couple of years, it is possible that 2 billion gallons of renewable diesel production will come online—this means another 15 billion pounds of feedstock will need to feed these plants. Even if only half those plants are completed, this is still more soybean oil than is projected to be added in the next few years. Without a doubt, one of three things will happen: Innovative crops will be commercialized with higher oil yields; substantially more acres will be devoted to soybeans and/or canola crops; or renewable diesel capacity expectations will need to be curtailed to more realistic levels. READ MORE

BIOFUELS ARE DRIVING UP ALREADY HIGH VEGETABLE OIL PRICES (Successful Farming)

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