Surging soybean crush capacity marks milestone in US agriculture

USA- The United States is witnessing a historic surge in soybean crush capacity, as confirmed by the latest report from the US Department of Agriculture (USDA).

Released on January 2, the Fats and Oils: Oilseed Crushings, Production, Consumption, and Stocks report revealed that November saw a remarkable 5.4% increase in soybean crush, reaching 6 million tons (200 million bushels), compared to 5.69 million tons (190 million bushels) during the same period in the previous year.

In tandem with the rising crush volume, crude soybean oil production in November reached 2.325 billion pounds, reflecting a 5.7% increase from the 2.2 billion pounds reported in November 2022.

Once refined soybean oil production also experienced growth, reaching 1.707 billion pounds, a 4.5% rise from the previous year’s 1.663 billion pounds.

To provide context, these figures signify an 8.3% increase in soybean crush volume compared to the 2018-22 average for November.

Crude oil production and once-refined soybean oil production both surpassed their five-year averages by 8.5% and 10%, respectively.

This upward trajectory is a testament to the industry’s efforts to expand domestic crush capacity. The American Soybean Association reported that for the 2021-22 marketing year, the United States had approximately 60 crushing plants capable of processing around 2.2 billion bushels of soybeans annually.

Further expansions in existing plants and the opening of a new facility in North Dakota in 2023 were expected to boost the domestic crushing capacity by 300,000 bushels per day.

Projections from the USDA in its December World Agricultural Supply and Demand Estimates forecasted 2023-24 US soybean crushings at 2.3 billion bushels.

Looking ahead, the trade anticipates additional expansions with the introduction of 12 new plants and 5 planned expansions by 2026, potentially increasing crush capacity by an additional 1.462 billion bushels per day.

The driving force behind this surge in crush capacity is the robust demand for soybean oil, particularly from the renewable diesel sector. The US Environmental Protection Agency’s (EPA) continued mandate for biofuel blending targets is a key factor.

The increased demand has contributed to a 41% reduction in soybean oil stocks between June and September last year, surpassing the typical five-year average decline rate of 13%.

Despite the strong and growing domestic demand for soybean oil, CME Group’s soybean oil futures have experienced a more than 40% drop from record highs seen in the spring of 2022.

The market’s response is attributed to the additional capacity coming online, coupled with rising imports of competitive feedstocks for biofuel use.

Another factor influencing soybean oil prices is the potential impact of evolving renewable fuel policies. Last year, the EPA proposed a biofuel credit allowance for electric vehicles, though not included in the updated mandate for Renewable Fuel Standards.

The current focus on promoting the integration of electric vehicles and developing related infrastructure may raise certain concerns, keeping in view the present pace of soybean processing capacity in the United States. The industry is dealing with these dynamics as it moves forward into a new era of soybean crush capacity.

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