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Go for the Green: Money, Environment and Soy Crush

Go for the Green: Money, Environment and Soy Crush

By Matthew Wilde

The explosive growth of domestic soybean crush that will consume hundreds of millions of bushels of soybeans is a game changer for farmers and the industry.

That’s how several grain producers, market analysts and soybean industry officials described the expansion. It will have a profound effect on commodity prices, the soybean complex, trade, seed production and possibly future planting intentions.

“It’s the biggest change that this industry has been through probably ever in a short period of time,” said Jim Sutter, U.S. Soybean Export Council executive director. “It’s driven by increased demand for renewable diesel.”

It’s a topic that required a deep dive behind the who, what, why, when, where and how of the story. Ultimately, the information is meant to help DTN readers — namely farmers and ag industry officials — make more informed business decisions.

In case you missed all or parts of the four-part series, you can find the links to the stories at the bottom of this blog.

Readers will also find the information in an upcoming issue of the Progressive Farmer magazine.

At least 14 new soybean processing plants are in various stages of construction, expansion and development — and Cargill just announced a new one this week for southeast Missouri, saying it will break ground early next year and complete it by 2026. A couple facilities have recently been expanded. Altogether, this most likely means U.S. soybean crush will increase by more than 500 million bushels in the coming years. In its May report, USDA’s crush estimate for the 2021-22 marketing year is 2.215 billion bushels.

What’s behind the big jump in crush? One word: green.

Renewable diesel use is skyrocketing due to green initiatives by federal and state governments and companies to reduce greenhouse gas (GHG) emissions and save the planet. Renewable diesel and biodiesel GHG emissions are, on average, 80% less than petroleum diesel.

Petroleum companies found they can make a lot of green selling renewable diesel due to various tax incentives and credits. Thus, production capacity has increased 86% over the last year.

Soybean oil is the most common feedstock used to make renewable diesel and has the most growth potential. That sparked the soy crush expansion.

The good news for farmers is the eventual competition for acres between soybeans and other crops will likely boost floor prices for all commodities, especially soybeans and corn. Competition for soybeans among crushers will also improve basis levels. That all equals more green for farmers.

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