Scot Bailey, farmer near Anita
HARVEST DESTINATION Global impact dependent on timing
BY JOSEPH HOPPER
T
he record books will remember 2021 as a year of challenges, transitions and pleasant surprises for Iowa’s soybean farmers. Leading the good news is the soybean harvest — it’s projected to break records as the largest in state history at 611 million bushels at 61 bushels per acre (up 7 bushels per acre from 2020). Where will the extra soybeans go from here? Demand will be key. The relationship between soybean meal and oil, which are produced through the crushing process at an approximate volume ratio, is changing. Soy oil — which historically represented about 33% of the total value to crush — has reached near price parity with soy meal thanks in part to increased demand for renewable fuels and biodiesel. Mac Marshall, United Soybean Board vice president of market intelligence, calls the change a “paradigm shift.”
16 | DECEMBER 2021 | IASOYBEANS.COM
“Oil drives domestic crush,” Marshall says. As domestic demand surges and with global production shortfalls across a lot of vegetable oils, the value of soy oil is creeping up, Marshall says. It’s incentivized additional crushing, which is helping drive down meal prices. Soybean meal is starting to become the byproduct of the crush. With soybean meal prices down roughly 20% for the calendar year, increased cost competitiveness has spurred early-season export strength. From Oct.1-28, exports for soy meal were 8% ahead of the five-year average. The declining meal price also represents some relief for the domestic animal agriculture sector. “It’s a critical feed ingredient, so
even with the surge in demand on the renewable energy side, it’s encouraging for the animal sector,” Marshall says. Scot Bailey, an Iowa Soybean Association (ISA) board member who farms near Anita, says increased demand for soy oil in the U.S. energy sector is exciting. He suggests soybean meal can be put to good use locally on farms, “Iowa has a lot of hogs, he says.” “We can utilize the extra production and get it used so we don’t end up with the prices crashing.” While whole soybean exports will likely recede from last year’s record, the 2021-2022 marketing year is shaping up to be a top-five volume export season based on early USDA projections.
