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Shifting market dynamics impact soy crush

The chief economist with the American Soybean Association says shifting market dynamics could have a greater impact on soy crush expansion.

At the start of 2023, there were at least 23 new or expanding soy crush plants across the United States and at least one of those projects is on hold due to “changing market dynamics.”

Scott Gerlt says raw material costs have increased and there’s uncertainty about the blending requirements in the Renewable Fuel Standard.

“Plants were largely being built to supply more soybean oil domestically with the expansion of renewable diesel,” he says. “EPA’s proposed numbers in December had almost no growth in that sector. We should see the final numbers by next week and should know more then, but I think that undercuts a lot of growth.”

Gerlt says more recently announced soy crush plants could be more vulnerable.

“In general, when there’s a new market, the earlier you get in, the better as more market participants enter profits tend to erode. There’s definitely a possibility there and a potential for more demand out there if EPA sets Renewable Volume Obligations higher for renewable diesel in the Renewable Fuel Standard.”

He says other policies, like the biodiesel tax credit and the low carbon fuel standard will have an impact on soybean oil demand.

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