Soybean prices in the United States are expected to record their second-highest annual average on record this year and the highest level since 1983, as growing demand from the expanding biodiesel industry adds to pressure on the market, according to the Agriculture Department, abc NEWS reported.
Biodiesel production, a renewable alternative to conventional diesel, has risen more than 1,200% over the past three years as the transport sector increasingly turns to alternative fuels.
The expansion is driving demand for soybean oil, the main feedstock for US biodiesel production. The share of soybean oil output used for fuel is expected to reach 12% in the fiscal year ending September 30, compared with 8% a year earlier and just 2% two years ago.
The growth comes despite soybean oil inventories remaining near record levels, Agriculture Department economist Keith Menzie said.
The US biodiesel industry is also adding production capacity. Biodiesel output is expected to rise to about 300 million gallons this year from 250 million gallons last year, according to the National Biodiesel Board.
Imperium Renewables recently opened a biodiesel plant in Grays Harbor, Washington, with a planned annual production capacity of 100 million gallons. The company expects its coastal location to allow it to source vegetable oils from international markets in addition to US soybeans.
Further capacity is being developed across the country. Renewable Energy Group, which describes itself as the largest biofuel plant operator in the US, operates six plants and has three more under construction.
Biodiesel can be produced from vegetable oils or animal fats. While used cooking oil has gained attention as a feedstock, soybean oil accounts for most US biodiesel production. The fuel can be used in pure form or blended with conventional diesel.
The increase in soybean prices comes alongside a rise in corn prices, with corn serving as the main feedstock for ethanol production in the United States.
The expansion of both biofuel industries has increased competition for agricultural commodities, linking crop markets more closely with the country’s growing demand for renewable fuels.
