SOYABEAN
Biofuels spur growth
In the early months of 2020, worries about the potential impact of the COVID-19 pandemic on global economic activity resulted in steep falls across a range of markets, with a retreat in vegetable oils stemming from a marked downturn in food and industrial demand. However, after bottoming out in the late March to early May period, vegetable oil markets surged. The uplift in soyabean oil prices has been especially sharp. After touching a multi-year low of US$580 fob in late April 2020, US Gulf export values have advanced significantly, reaching a high of US$1,678 fob in late April 2021. While similar rallies were seen in Argentina – by far the world’s largest soyabean oil exporter – and Brazil, gains in the US market have been especially dramatic, reflected in sizeable premiums
over competing origins. Boosted by strong demand from China in particular, US soyabean exports have progressed at an unprecedented pace, with shipments forecast to total a record of 62.1M tonnes for 2020/21, an increase of around a third against the previous season. Together with solid domestic demand, the International Grains Council (IGC) expects US soyabean ending stocks to plunge in the year ending 31 August 2021 to just 3M tonnes, an almost 80% yearon-year decline and the smallest amount in seven seasons. The US Department of Agriculture (USDA)’s supply and demand projections issued in mid-May also point to another year of large soyabean disposals (exports and domestic consumption) for 2021/22, with end-season inventories set to remain historically tight.
US biodiesel demand
A key element supporting record US soyabean disposals has been growing domestic uptake of soyabean oil, mainly stemming from increased use in the biofuels sector. As the USA is one of the world’s leading producers of soyabeans, soyabean oil has
(projected)
Figure 1: US soyabean oil consumption by sector (million tonnes) 34 OFI – JUNE 2021
Biofuels soya.indd 2
Source: IGC
The biodiesel and renewable sectors are playing an increasing role in shaping US consumption of soyabean oil Darren Cooper
been traditionally the most important biofuel feedstock utilised by volume. Biodiesel is produced through transesterification, a chemical process that converts fats and oils into fatty acid methyl esters (FAME). Renewable diesel, which has gained traction in recent years, is manufactured via hydro-treatment at a high temperature and is often referred to as hydro-treated vegetable oil (HVO). While biodiesel is blended with petroleum diesel, renewable diesel is broadly physically and chemically identical to petroleum diesel. As such, it can be used in a blend but also consumed independently, with existing diesel engines requiring no modification. It can also be stored in much the same way. As with biodiesel, it can be manufactured using an array of raw material inputs including vegetable oils, notably soyabean oil, rapeseed/canola oil and corn oil, as well as recycled feedstock materials such as used cooking oils (UCO), fats and residues. The closure of much of the US hospitality sector at times over the past year led to a reduction in recycled feedstocks such as UCO and fat, with processors utilising larger quantities of soyabean oil for biofuels production. Data from the USDA also highlights the growing importance of the biodiesel and renewable diesel sectors in shaping US domestic consumption of soyabean oil over the past decade (see Figure 1). While the food sector remains the largest sector, industrial demand – which comprises biodiesel and renewable diesel – has advanced significantly in recent years and, based on the USDA’s latest outlook, is forecast at an all-time high of 4.3M tonnes in 2020/21, a year-on-year gain of 10%. In contrast, uptake in the food market segment is expected to rise www.ofimagazine.com
11/06/2021 13:20:50
