The United States is in the midst of the most dramatic expansion of soybean processing capacity in history. Reasons are: 1. Significant processing margins allowing excellent returns to investment, 2. an ever expanding need to provide the growing world with food, fuel and feed like no other commodity can, and finally, 3. the recent mandates, tax credits and subsidies for Renewable Diesel and Sustainable Aviation Fuel.
The most recent and impactful impetus for the expansion was precipitated by the California Renewable Diesel mandates, as well as Federal EPA guidance and tax credit schemes that require huge amounts of biofuels to reduce petroleum use. A 20% increase in domestic crush is underway with several significant implications for soybean meal users worldwide. Soybean oil demand for renewable diesel will be subsidizing the price of soybean meal as an additional 10 million metric tonnes of soybean meal will have to disappear, on top of the current production of 54 million metric tonnes. So, what is likely to happen:
- Soybean meal price will come down relative to other proteins.
- Soybean meal availability will increase as new capacity comes on line.
- Soybean meal quality will improve due to new plants with new equipment.
- Exports of soybean meal will have to increase, as well as domestic consumption.
The growth in Soybean Processing will precipitate higher quality and more consistent soybean meal as new plants, with new equipment will need to buy their way into existing markets.
This is the most exciting and dynamic time in the history of soybeans due to the expansion’s, increased usage of soybeans for food, fuel and feed, and due to the dire need to reduce global warming through more sustainable actions. Opportunities abound!
