Soybean Oil Becomes New Driver of Crushing Economics Amid Global Tightening
The traditional economics of soybean crushing are undergoing a significant shift. For decades, processors bought soybeans and extracted soybean meal, which generated most of the revenue. The remaining soybean oil was sold as a byproduct to the food market.
However, this model has been rapidly changing due to strong demand for soybean oil, particularly in the biofuels sector. In the US, the EPA's largest-ever biodiesel mandate for 2026 is driving up consumption of soybean oil. Domestic production is struggling to keep pace with this surge in demand.
In Brazil, the second-largest producer of soybeans, prices have risen sharply due to a combination of factors. Soybean meal exports are at record highs, absorbing supplies that would otherwise be available for domestic processing. Meanwhile, biodiesel production remains delayed, keeping domestic soybean oil demand below its potential.