Soy Oil Fueling Crush Expansion: A Ten-Year Outlook

In the next three years, over USD 2.8bn will be invested to expand crush capacity in the US, adding ~300m bushels, enough to cover meal demand but not rising oil needs. Such rapid expansion will have implications in the form of higher soybean prices and acreage expansion, which should benefit oilseed producers as domestic demand increases.

- The expected expansion will push more soy oil and soymeal to the market, and as renewable diesel continues to expand, the demand for soy oil will be covered by the biofuel industry. The food sector will likely see higher prices.

- Soymeal will face more challenges, as soymeal production will outpace domestic animal protein production growth. This will push the need for the US to expand soymeal exports to existing and new markets internationally.

- Crushers will need to find a way to adjust the share of value derived from soy oil in their gross margins, as soymeal prices will be under pressure, and even more so if soymeal export growth does not materialize.

- Current investment only covers a little over 10% of the feedstock needs of the announced renewable diesel capacity. In this scenario analysis, we evaluate the impact and implications of soy oil covering 25% of renewable diesel feedstocks. The results show that such a steep increase in soy oil use is not likely to happen due to land, margin, and price limitations on the soybean complex.