USSEC hosts a year-end look at soy industry

December 9, 2021 | Joseph Hopper

What will the soybean industry look like once calendars read 2022, 2023 and beyond? Trends in U.S. soybean production, exports and crush were analyzed during a U.S. Soybean Export Council (USSEC) online discussion broadcast from St. Charles, Missouri, on Thursday.

Mac Marshall, vice president of market intelligence for USSEC, discussed supply and demand for soy in the energy sector, suggesting recent growth in the soybean processing industry wouldn’t shortchange international buyers.

“Even as we have all this announced crush expansion it’s maybe a 20% increase in the next seven years relative to existing capacity,” says Marshall. “We’re still going to have ample amounts of whole soybeans that will be available for international markets, which I think is exciting.”

With many farmers keeping a close eye on recent biofuels policy activity in Washington, D.C., Alexa Combelic, director of government affairs for the American Soybean Association (ASA), outlined the key biofuels provisions expected in President Joe Biden’s Build Back Better bill.

“The hope is that will be signed into law at the end of the year,” Combelic says. “That (bill) includes a biodiesel tax credit which is a $1 blender’s tax credit, … the four-year extension of that really allows the market to continue to grow.

She continued, “In addition to that, it includes some new tax credits for Sustainable Aviation Fuel (SAF) for the first time ever. …  After some fighting in Washington, soybean oil and other ag feedstocks should be eligible for that SAF credit in the coming years.”

Dr. James Fry, president of LMC International, offered some bold predictions in the vegetable oil space, saying “the world cannot look to palm oil to meet its growth in oil demand.” Instead, Fry says, soy is in a prime position to grow its presence in the vegetable oil landscape.

“Why do we need more soybeans?” Fry asked. “It’s all to do with palm.”

Fry called Indonesia and Malaysia the “two mega producers” and suggested palm oil yields there have stagnated and sector growth has declined due to the labor intensity required.

“These are trees, they have an economic life of 25 to 30 years,” says Fry. “The trees that will be harvested in 2030, nearly all of them are there and aren’t going to be replanted in the meantime.”

The LMC president predicted oilseed peers sunflower and canola (rapeseed) will experience 1.5% to 2% annual growth.

“The one oil that can—and we believe will meet the growth which will come from renewable diesel—is  soybean oil,” Fry says.

Looking to the 2022 planting season, Scott Gerlt, ASA economist, expects little fanfare in the competition for acres between U.S. corn and soybeans.

“Crop prices are better now than they’ve been in the past few years,” Gerlt says. "Corn has higher fertilizer costs so the increase in fertilizer costs are going to cut into the margins there, but right now the market has a little bit more of the premium on corn. I’m not expecting a wide swing overall on acres at this point.”