OMAHA (DTN) -- Farmers know they're only a bumper crop or two away from below-cost grain prices. A bright spot on the soybean horizon is the expected high demand for soybean oil for renewable diesel and aviation fuel production.
Renewable diesel production and demand are soaring, which could increase the floor for soybean and corn prices by at least $3 and $2 per bushel, respectively, explained DTN Lead Analyst Todd Hultman. He likens the rise of biofuel and commodity prices to the ethanol boom in the mid-2000s.
"It's a new dimension of demand for soybean products that we've never seen before," Hultman said. "It's hard to grasp the potential."
That's led to a rush in permits for soybean crushing plants, with at least seven new or expanding plants announced since mid-2022. Those plants alone are expected to add 564 million bushels of crush capacity by 2026.
DTN began covering the crush plant craze early in 2022 and has continued to update the market on the subject throughout the year.
Renewable diesel production has nearly doubled from 971 million gallons per year in 2021 to 1.92 billion gallons in 2022, according to the U.S. Energy Information Administration (EIA). Refiners are quickly ramping up production to satisfy an insatiable demand for the environmentally friendly, low-carbon fuel and cash in on federal and state tax credits. The federal Renewable Fuel Standard (RFS) also generates a potentially lucrative market for renewable identification numbers, or RINs.
As with any rapid expansion, growing pains and altered plans are likely. In early December Epitome Energy announced its $400 million crushing plant planned for Crookston, Minnesota, is now scheduled to be built near Grand Forks, North Dakota.
Epitome CEO and founder Dennis Egan cited the company's frustrations with the state of Minnesota in completing the needed air permitting processes as the reason for the move.
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