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 realization that renewable biofuels can mitigate the effects of climate change, lower the carbon intensity of transportation and improve the sustainability of agriculture. 

The most recent and impactful impetus for the expansion was precipitated by the California Renewable Diesel mandates and tax credit schemes that require huge amounts of biofuels to reduce petroleum usage. Current sustainability indexes and carbon intensity scores give a significant advantage to renewable vegetable oils and other fat feedstocks. The technology has proven that the older biodiesel process can be further amplified to provide a fuel that can be burned in diesel engines at a 100% rate with no impact or changes needed to the engines. The older 10% blend of biodiesel that consumed about 40% of the domestic production of soybean oil will need to increase to provide adequate supplies of the 100% “drop in” fuel with identical physical and chemical characteristics of petroleum diesel…Renewable Diesel. 

The new technology has forced the marriage of soybean processors, the crushers that will provide the RBD (refined, bleached, deodorized) soybean oil with petroleum refiners for further refining of RBD soybean oil to produce a fuel that can be used with no engine modifications at a 100% rate. The new fuel can provide a cost effective, sustainable, lower carbon score, more environmentally friendly fuel for the heavy long-haul trucks, shipping vessels, railroad engines, heavy equipment and farm machinery. Other states (Oregon, Washington, New York, Minnesota) are in various stages of adopting the California standards, thus dramatically increasing the future demand for fats and oils. 

Various fats and oils, with corresponding carbon intensity scores, can and are being utilized. Used cooking oil, canola oil, lard, tallow, yellow grease, corn oil, imported soybean oil, etc. can all be used to make renewable diesel. With soybeans being the dominant oil crop in the United States, US processors have jumped into significant and dramatic expansion of both existing and new plants. Over the past few years, the US has grown around 4.5 billion bushels of soybeans, with almost half of the exported annually, and the other half processed domestically into valuable animal feed and oil for human consumption and biodiesel. Farmers always plant what makes the most economic sense. Rotation between corn and soybeans has traditionally ruled the acreage wars. It is anticipated the future might see more soybean acres, slightly less soybeans exported, and a dramatic increase in domestic soybean processing capacity. Some plants have already been constructed and/or expanded. Many others are in various stages of construction or planning. The “announced” plants, if all come to fruition, would increase domestic crush and the available meal and oil by 27%. However, due to margin deterioration, disappointing EPA mandates and the realization that disposition of soybean meal will take some time, several plants have decided to slow or halt construction. Currently, a +20-24% increase in domestic crush feels more likely…still a huge increase. 

In one sense, soybean oil demand for renewable diesel will be subsidizing the price of soybean meal as an additional 11 to 12 million metric tonnes of soybean meal will have to disappear, on top of the current production of 49 million metric tonnes. So, what is likely to happen: 

1. Soybean meal price will come down relative to other proteins. 
2. Soybean meal availability will increase as new capacity comes on line. 
3. Soybean meal quality will improve due to new plants with new equipment. 
4. Exports of soybean meal will have to increase, as well as domestic consumption. 
5. Inclusion rates of soybean meal will likely increase due to price and new studies. 
6. Poultry (broilers, layers and turkeys) are by far, the #1 consumer of US soybean meal with ~66% of production consumed domestically by birds. Growth in this industry is vital for the new soy plants to operate near capacity. 
7. Relationships between processors and nutritionists (the two most valuable links of the soybean value chain) will have to increase in communication, openness and trust.
8. Improved FCR (feed conversion ratio) via higher quality soybean meal can be realized by simple communication and value sharing. Every plant in the US can make better quality soybean meal today with no new equipment or manpower, but a nutritionist must value and compensate for opportunity loss and energy consumption.