Crush Expectations: How More Soybean Processing Capacity Benefits South Dakota Farmers
Domestic processing of U.S.-grown soybeans has accelerated in recent years, driven primarily by the expansion of existing facilities as well as the addition of new plants across the Midwest and South. Industry experts point to increased demand for biofuels that use soybean oil as a primary feedstock — including biodiesel, renewable diesel and sustainable aviation fuel (SAF) — as a strong indicator that this trend will continue for the foreseeable future.
The American Soybean Association projects that by 2026, the U.S. will add as many as 750 million bushels to its annual crush capacity. This would amount to a 34 percent increase in domestic processing and radically change the agricultural landscape throughout key soybean-producing regions.
South Dakota’s role in crush capacity growth
South Dakota is among those regions readying for this change. When the new High Plains Processing facility near Mitchell opens in 2025 and is able to meet its daily target of 100,000 bushels, the state’s overall crush capacity will roughly double.
Tom Kersting, South Dakota Soybean Processors (SDSP) Chief Executive Officer, understands what’s at stake for growers across the state. “To unlock their economic value, soybeans have to be processed — and there's a lot of value to be unlocked,” says Kersting. “Anytime you can process [soybeans] locally, you'll improve returns to the area. So instead of being created overseas, that value is created right here at home in South Dakota.”
Forecasters see support for basis levels
As a Mt. Vernon-area farmer just twenty minutes from the new processing facility, it’s easy for Kevin Deinert to get excited about this development. “Having more crushing capacity really adds value to the soybeans that we produce in South Dakota,” says Deinert, who currently serves as president of the South Dakota Soybean Association.
But Deinert sincerely believes the positive impact will be realized by his fellow soybean growers all across the state. “By increasing those basis levels so we can capture more value closer to home, this is helping our South Dakota farmers get more money for their soybeans,” says Deinert.
With strong local demand and competition amongst buyers, industry leaders in South Dakota — and nationwide, for that matter — view new facilities and increased processing capacity overall as a win for growers everywhere. A boost in processing capacity will almost invariably support stronger basis, they reason, both within close proximity to a crush facility and radiating far beyond.
Livestock producers reap benefits, too
Deinert also believes that increased crushing capacity in-state will positively impact the livestock industry. “Previously, soybean meal used to be the main driver for demand because of its use in the animal industry,” he explains. “Now, it's totally flipped. Oil has been really driving demand.”
Since oil and meal are both byproducts of the soybean crushing process, industry experts have identified that a radical increase in in-state processing will result in surplus availability of soybean meal.
“It's going to be a great opportunity for those local hog producers to source their soybean meal a little closer to home while driving down costs,” says Deinert, who believes the state’s hog herd will increase as a result. “It’s very exciting for those in the hog industry.”
The importance of sustained demand for biofuels
In summary, the region’s new processing plants represent an exciting development for soybean producers everywhere. Much of their success is rooted in sustained demand for renewable diesel, biodiesel and SAF, and South Dakota Soybean remains committed to promoting these renewable energy sources derived from soybeans. To follow this ongoing development, visit sdsoybean.org or contact your district director for the South Dakota Soybean Research and Promotion Council.