Dr. James Fry on Soybean Oil Demand

A vegetable oil analyst sees growing soybean oil demand as a renewable diesel fuel feedstock partly because of flattening palm oil production. Soybean oil production is set to overtake palm oil production in a few years, according to Dr. James Fry, founder of LMC International in Great Britain. “By 2030, soy will be far ahead of palm, significantly ahead as the leading oil,” said Dr. Fry, during a U.S. Soybean Export Council webinar. “The world cannot look to oil palm to meet its growth in oil demand.”

Soybean oil’s anticipated demand growth becomes clearer with Dr. Fry’s comparison of the blend walls for ethanol and biodiesel to the absence of a blending limitation for renewable diesel, which is formulated from vegetable oil to be chemically the same as petroleum diesel.

“Renewable diesel has emerged as the ideal biofuel for future biofuel growth,” said Dr. Fry, “and that creates opportunities for soy oil.”

Dr. Fry draws this conclusion: Pricing signals received by U.S. farmers and by South American farmers will result in soybean production increases.

“In the U.S. I think it’ll be partly taking land from other crops,” he said, “and in the projections that I have been making showing soy oil becoming the world’s dominant oil, I think [U.S.] soybean area will up to 94-95 million acres, up seven to eight million from the USDA estimate for this year.”

Dr. Fry also cites declining palm oil yields versus rising soybean yields. “And I believe the average yield will rise from just over 51 bushels per acre to over 55.”

In the background of these forecasts, says Dr. Fry: “With these greater demands for oil I expect to see seed companies working even harder to see if they can edge up the oil content of beans.”

Along with greater renewable diesel production, Dr. Fry says there will be a corresponding increase in U.S. soybean crush capacity. But what about exports, which are also projected to strengthen?

“Rising U.S. crops over the next five years, I believe, will roughly match the growth in the crush, and therefore, bean exports should be fairly well maintained until 2027,” said Dr. Fry. “But after that it is sustainable aviation fuel that becomes crucial.”