The soybean industry has been crushing more beans to keep up with biodiesel demand. That was the news from Mac Marshall, vice president of market intelligence for United Soy Board/U.S. Soybean Export Council, when he spoke recently to growers in the Delta.
“We have this emerging sector called renewable diesel,” he said. “It (was) kind of the backwoods part of the energy complex up until last year. And then, there started to be waves of announcements of new renewable diesel facilities being constructed around the country.”
This has increased the demand for renewable fuel sources across the U.S. as clean energy incentives push energy developers to look for those sources, Marshall said.
“What that has done is it has led to really aggressive bidding for soybean oil,” he said. “We’ve seen bean oil go up pretty substantially. They’ve come down since cresting in June, actually hitting a record $0.74 a pound at the end of June.”
Prices remain about 40 percent higher than they were in January.
The trend has brought into balance the value contribution of soybean meal vs. soybean oil. Historically, meal accounted for 65 to 70 percent of the value of beans.
“So, what this is doing is, crushers are now effectively incentivized to crush for oil, rather than meal,” he said.
Marshall said soybeans rose to $16.60 per bushel in May—the highest price in 10 years.
Last week, however, USDA’s October Crop Production and WASDE reports caused the soybean market to tank.
Soybeans production is now expected to be 4.45 billion bushels, up 2 percent from last month. If realized, it would be a new production record.
Soybean prices fell following both the September Grain Stocks report, as well as last week’s USDA October supply-and- demand report.
Sources: Farm Progress, USDA