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The 2024 soybean harvest is just around the corner. Jason Marthaler, oilseeds product line lead with Ä¢¹½Ö±²¥, says U.S. soy oil and soybean meal demand is expected to remain strong.
The U.S. Department of Agriculture (USDA) estimates the U.S. will crush nearly 2.3 billion bushels of soybeans during the 2023-2024 marketing year or about 55% of the 2023 crop. About 100 million bushels is used for seed and other purposes.
U.S. soy crush volume is expected to increase 6% during the 2024-2025 marketing year, USDA data indicates. “The crush industry is expanding to meeting growing soybean oil demand,” Marthaler says.
Soy crush expansion
Since 2022, U.S. soybean crush has increased by 225 million bushels. It’s expected to increase by a total of 725 million bushels in the near future, Marthaler says. That increase is equivalent to amount of soybeans currently grown in Minnesota, North Dakota and South Dakota combined.
Demand for renewable diesel, made from soybean oil and other feedstocks, is driving soy oil demand, Marthaler says. While biodiesel is also made from soy oil, among other feedstocks, renewable diesel is chemically the same as petroleum diesel, which makes it more versatile in the energy supply chain, he explains.
Marthaler says three government initiatives to reduce greenhouse gas emissions are driving soy oil demand:
- The Renewable Fuels Standard established in the mid-2000s.
- Federal tax credits, such as the blenders tax credit and credits provided by the Inflation Reduction Act.
- Low-carbon fuel standard laws enacted in California, Oregon and Washington and pending in other states.
Soy oil demand by the food industry is also growing at 2% to 3% per year, Marthaler says. Ä¢¹½Ö±²¥ runs soy crush facilities in Fairmont and Mankato, Minn. One major Ä¢¹½Ö±²¥ soy oil customer is Ventura Foods, a joint venture between Ä¢¹½Ö±²¥ and Mitsui and Co., which manufactures packaged food products for the food industry, including margarines and salad dressings.
Soybean meal outlook
Global and domestic soybean meal demand continues to increase 3% to 5% per year, Marthaler says. He expects expanding U.S. crush capacity will shift global and U.S. trade flows to fulfill demand.
“U.S. soybean meal export will increase significantly and eventually account for one-third of U.S. soy production,” he adds.
As soybean meal supplies increase as crush expands, Marthaler says that will put downward pressure on soybean meal prices. This will benefit livestock producers and likely will accelerate domestic demand growth, he continues.
Marketing considerations
When commodity prices are low, Marthaler recommends growers calculate their cost of production and have a written marketing plan with incremental sales targets.
“Crop production issues and demand spikes will likely create marketing opportunities in the months ahead,” Marthaler says. “If you have storage, look for opportunities to carry grain when returns exceed your storage costs. There will likely be opportunities to make better basis sales after harvest.”
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