USDA, USB track biodiesel's effect on soybean market

By Susanne Retka Schill | June 21, 2007
Biodiesel's growing impact on soybean markets will now be tracked in a major USDA report, the association recently announced. The season's first World Agricultural Supply and Demand Estimates (WASDE) report, released May 11, projected that biodiesel producers will use 19 percent of total soybean oil production for the 2007-2008 crop year compared with 13 percent in 2006-2007.

The WASDE includes the USDA's comprehensive forecasts of supply and demand for major U.S. and global crops. The first monthly report of this season listed projections for soybean oil to be used domestically for methyl ester, a key ingredient in biodiesel, based on data compiled by by the U.S. Department of Commerce. WASDE monthly reports are developed by committees of USDA analysts in nine commodity categories using data compiled by many USDA and other government agencies. The reports are available at

Price projections in the same report predict the season average soybean price at $6.50 to $7.50 per bushel, compared with $6.30 per bushel last season. Soybean oil prices are projected at 29.5 to 33.5 cents per pound compared with 29.5 cents per pound last season. Soybean meal prices are forecasted at $185 to $215 per ton compared with $195 per ton last season.

USB studies soy meal outlook
With the production of soy-based biodiesel tripling from 75 million gallons in 2005 to an estimated 225 million gallons produced and sold in 2006, the United Soybean Board (USB) commissioned a comprehensive study on the future of soybean meal. The study, called "Soybean Meal Evaluation to 2020," predicts that biodiesel will be the primary factor driving developments in the U.S. soybean crushing industry. Based on what has happened in the European Union (EU), the report predicts that increased demand from biodiesel will boost crush margins that will result in expanded crush capacity in the U.S. market. Multinational companies in the EU are now importing oilseeds.

Soybean crush capacity is expected to increase by 66 percent between 2005 and 2020, while U.S. soybean crops are expected to increase 21 percent. At the same time, 22.8 million metric tons of soybeans are projected for export, down from 29.3 million metric tons exported in 2005, according to the report. Despite the 66 percent increase in soybean crush capacity, there is only a forecasted 20 percent increase in domestic meal demand. Thus, soybean meal available for export will expand four-fold by 2020.

"The two most striking developments are the rapid increases in soybean meal exports and the transformation of the United States into a sizable net importer of 4.8 million metric tons of soybean oil by 2020," the report concluded.

The 250-page study is available in the Library section of the USB Web site at
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