Farmers face soybean surplus amid renewable diesel expansion
The growing biofuel industry, particularly renewable diesel, was expected to create a strong market for U.S. soybeans.
A record soybean harvest has left many farmers with an unexpected surplus, despite the rapid expansion of biofuel production. While the capacity for producing renewable diesel has grown significantly, this hasn’t prevented soybeans from piling up across U.S. farms.
In Mitchell, South Dakota, a new processing plant is under construction to crush millions of bushels annually, which farmers hope will relieve some of the pressure caused by the current glut.
Farmers remain optimistic about the future but recognize that it will take time for demand to catch up with supply. Renewable diesel, made from soybeans, animal fats, and other materials, was seen as a potential solution to the challenges facing soybean growers.
However, this year’s bumper soybean crop has pushed down prices, while other factors such as the influx of used cooking oil imports for biofuel production have added to the challenges.
The unexpected closure of a processing facility in Iowa has also created delays, and lower water levels on the Mississippi River have made it harder to export soybeans.
Further uncertainty comes from potential policy changes. California’s possible restrictions on the use of seed oils in biofuel production are a particular concern, especially for soybean farmers.
As the industry waits for new infrastructure and higher demand to materialize, U.S. farmers are left navigating a complex market dynamic that impacts their profitability.