News

Soy oil demand driven by CA low carbon fuel standard

Strong soy oil demand is being driven by California’s low-carbon fuel standard as it seeks renewable diesel.

USDA Economist Seth Meyer says that’s driving the higher price and challenging food companies that depend on vegetable oils.

“These (plants) are being built by big petroleum companies who will put those plants, if not inside the gate of the refinery, next to the refinery and that changes the political dynamic about their opposition to biodiesel.”

Scott Gerlt, American Soybean Association economist, says demand for renewable diesel will keep growing but won’t meet the anticipated 7-billion gallons in expected production capacity these oil refiners had planned, “If you produced all this renewable diesel and send it to California, it’s really, they’d get more carbon credits than the market needs so you would crash that market. So, this is driving a lot of things. We are seeing expansion and we will continue to see expansion (but) it’s hard to see 7-Billion gallons of expansion.” Gerlt says they’re already seeing these new plants going on pause as prices skyrocket.

Meyer and Gerlt made their comments at the Ag Outlook Forum sponsored by AgriPulse and the Agricultural Business Council of Kansas City.