‘Very good’ biodiesel industry has bolstered soybean oil demand

January 17, 2024

The biodiesel industry is strong. When asked how the renewable fuel is doing, the short answer from Tom Verry, director of outreach and development for Clean Fuels Alliance America is “very good.”

“We are going to hit 4 billion gallons of [biodiesel] usage this year,” Verry told the South Dakota Soybean Network, late in 2023. “That’s about 10 percent of the on-road diesel market on a national average.”

Biodiesel is produced using a variety of fats, both animal and vegetable. Verry is confident soybean growers will be happy to know that the feedstock most used in the production of biodiesel is soybean oil.

“About a billion pounds a month, we’re on the pace,” said Verry. “We produce 24 or 25, 26 billion pounds of bean oil in the United States, and we’re going to use half of that, which is a really good thing because we have all the soybean [we can use]; we can’t eat anymore. So this is a great alternative use for it that we can turn it into a low-cost, low-carbon energy.”

The growth of biodiesel has been fast. The goal for biodiesel usage is to get to six billion gallons by 2030, according to Verry, adding that that goal is likely to be reached earlier. The renewable fuel had rather modest beginnings. Soybean growers launched biodiesel using checkoff funds for research and promotion. Now, Verry compares its growth to a snowball picking up snow and momentum as it rolls downhill. An impediment to further growth, said Verry, is the fuel’s most often used feedstock.

“Soybean oil,” he said. “We’re going to need more soybean oil and we definitely have a market for it. How does that show up for your farmer listeners? Well, it shows up in their price per bushel; $1 to $2 more per bushel because of biodiesel and renewable diesel. It’s also going to show up in the amount of soy crush. They’re going to expand over 30 percent in the next several years. They’re going to produce almost a billion pounds more of soybean oil that we can use.”

Citing numbers released by the USDA late in 2023, Verry said demand created by biodiesel has resulted in significant growth for soybean processing.

“We had record crush and we had record soybean meal exports and that’s all because of the value that the industry is putting into biodiesel and renewable diesel,” said Verry, “and we need that soybean oil to grow our market.”