Market conditions currently affecting soybean oil, based on recent media accounts, appear to have pitted one essential soy market against another. Yet, we at the American Soybean Association—and more specifically, the 500,000 U.S. soybean farmers we represent—appreciate and rely on both our food and our fuel customers and make decisions daily to support the sustained health of all soy markets. 

The challenges being voiced by our food manufacturing partners about soy oil markets are concerning—and we empathize with their frustrations. Our farmers are likewise feeling the pain of higher input costs for items such as chemicals and fertilizers that have recently doubled or even tripled in some cases. But, despite continuing price increases for many vegetable oils including canola, soybean oil prices have actually come down by over 10% since October. 

It has been noted that the U.S. was a net importer of soybean oil for two months in 2021 (August and September). Of the soybean oil imports that have been reported by USDA for 2021, more than 98% entered tariff-free, including via Canada and Mexico per the terms of USMCA. The U.S. quickly returned to its historic norm of being a net exporter, but that temporary extra supply helped increase soybean oil supplies following a historic year of soy exports and just before U.S. farmers began harvesting a record-sized crop of soybeans (and thus, soybean oil). For the 2021 year as a whole, the United States was a substantial net exporter of soybean oil. Moreover, USDA data show that soybean oil use for food in the first three quarters of 2021 (10.9 billion pounds) exceeded the corresponding period in 2020 (10.2 billion pounds). Simply put, food usage of soybean oil has been about 7% higher in 2021 than in 2020.  

While the most recent data indicates that soybean oil for food use has remained abundant, what about concerns regarding the increase in blending obligations for the current year? The advanced biofuel mandate was increased by 11% from calendar year 2021 to 2022, and USDA is projecting just under a 25% increase in soybean oil use for biofuels for the current marketing year. However, USDA is only expecting a 2% drop in “food, feed and other industrial use” for the same period. This level for the category that includes food use still would remain higher than just two years ago. USDA’s projections simply do not support the narrative that soy oil will be unavailable for food production. 

Announcements that new renewable diesel plants will be built have caused much excitement, and the news is spurring plans for increased soybean crushing and oil refining capacity. However, those intentions do not immediately translate into increased use of soybean oil for biofuels. USDA has recorded monthly soybean oil data through September 2021. For those first three quarters, soybean oil used for biofuels (6.5 billion lbs.) is less than the comparable period in 2020 (6.8 billion lbs.). In other words, current information indicates slightly less soybean oil used for biofuels, not more. Further, this represents only 35% of soybean oil production during the same time period in 2021. 

Soybean oil is a versatile, inexpensive, and plentiful vegetable oil. While being a key ingredient of many food products, it represents a very small share of actual food costs, ensuring consumers generally experience very few repercussions from swings in market prices. For example, even at higher soybean oil prices, the cost of the vegetable oil is often less than 1% of the retail price of a loaf of bread. Whether farmer, food manufacturer, retailer, or foodservice, we all strive to supply affordable food and food ingredients for consumers, yet market conditions sometimes dictate that temporary price increases will occur. USDA projections, however, clearly indicate an expectation of plenty of availability for all uses of soy. 

No one—including soybean farmers—wants to see grocery shelves short on the snacks and staples we love. Yet, the data simply does not support this scenario as a realistic outcome. And, with spring planting just around the corner, we are committed to growing ample, quality soybeans to meet the needs of all our customers, whether they be food manufacturers, feed millers, or biofuel producers.   

Stephen Censky, CEO, American Soybean Association

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