USDA Sees Record Demand For Soybean Oil As Biodiesel Feedstock

February 07, 2018 7:13 PM

In late October, the U.S. Environmental Protection Agency’s (EPA) decided not to move forward with reducing the biomass-based diesel and advanced biofuel requirements after the organization received backlash from corn-state lawmakers who expressed concerns that the moves would undercut ethanol demand. 1 In the USDA’s December supply demand update (WASDE), demand for soybean oil during the current marketing year as biodiesel feedstock was raised from 7 billion pounds to 7.5 billion pounds, a record amount. 2

The WASDE also showed reduced domestic usage of soybean oil of 300 million pounds, so the net increase in forecast usage is only 200 million pounds. This did not affect future prices subsequent to the report. The USDA’s forecast cash price for soybean oil during the marketing year is an unchanged 34.5c/lb., which is a 2c/lb. increase from 2016’s average price. There were no significant changes to the soybean and soybean meal supply and demand projections in this report.

Expect the soybean oil price to display a soft tendency in the near term and to follow petroleum prices, longer term.

References

1. Jarrett Renshaw. “EPA Abandons Changes to U.S. Biofuel Program after Lawmaker Pressure.” Reuters. October 20, 2017. https://www.reuters.com/article/us-usa-biofuels/epa-abandons-changes-to-u-s-biofuel-program-after-lawmaker-pressure-idUSKBN1CP1IL
2. “World Agricultural Supply Demand Estimates.” https://www.usda.gov/oce/commodity/wasde/latest.pdf United States Department of Agriculture. December 12, 2017.

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Richard GallowayAbout the Expert

Richard Galloway is president of Galloway and Associates, LLC, a business consulting firm serving domestic and foreign agricultural processing, vegetable oil refining, biodiesel and grain handling industries. Galloway is a consultant to the QUALISOY Board, a collaborative effort among the soybean industry to help market the development and availability of trait-enhanced soybean oils, including high oleic soybean oil. Read More...