Chip Flory: Green Fuel Drives The Future Of Soybeans
The soybean industry continues to prep for what’s expected to be demand growth for renewable diesel, sustainable aviation fuel (SAF), “green” marine fuels and higher blends of biodiesel in home heating in the eastern U.S. Here are a few numbers for perspective:
- Soybean oil use for biofuels was 8.66 billion pounds in 2019/20, increased to 8.85 billion pounds in 2020/21 and is estimated at 11 billion pounds in 2021/22.
- Soybean oil use for food, feed and other industrial uses was 13.66 billion pounds in 2019/20, 14.47 billion in 2020/21 and is projected to slip back a bit to 14.15 billion pounds in 2021/22.
With expansion of existing facilities and increased efficiency, soybean oil production increased from 24.91 billion pounds in 2019/20 to an estimated 25.91 billion pounds in the current marketing year. Soybeans crushed increased from 2.17 billion bushels in 2019/20 to an estimated 2.19 billion bushels this year.
The only reason soybean oil ending stocks haven’t been drained is because U.S. soybean oil exports have been cut in half from 2019/20. They are estimated this year at 1.43 billion pounds.
THE NEED FOR GREEN
Those most optimistic about the future of renewable diesel, SAF and green marine fuels say total feed stocks of 40 billion pounds will be needed in five years. Since other sources of fats, oils and grease are expected to hold steady in the future, refiners will rely on the vegetable oil market to provide needed supplies.
Investments have been made and ground on new crush facilities has been broken, but the actual production of the “new” soybean oil to feed into fuel production hasn’t started. Some bushels from 2022 will be tucked away for the first of the plants that will come online in 2023.
Soybeans from the 2023 crop will be in much higher demand to feed new capacity. The 2024 soybean crop will be expected to supply 400 million bushels of crush capacity by the new facilities listed on the map. If all the plants make it to full capacity by 2025, soybean crush could reach 2.6 billion bushels. That would produce about 30.75 billion pounds of soybean oil.
CRUSH CAPACITY EXPANDS
If these crush plant locations, which are in the planning or construction phases, all make it to production, they’ll add about 400 MILLION BUSHELS of domestic soybean demand by the start of 2025.
All this means one thing — soybeans will be bidding for U.S. acres in the next three years (and longer) to feed crush expansion.
Read More
Fuel the Crush: Renewable Diesel Pumps Up Soybean Demand
How Will A Surge in Bio-Based Fuels Impact Grain Demand?
As Farm Journal Economist and host of the “AgriTalk” radio program, Chip Flory helps farmers understand the markets and seize opportunities.
