News

Survey: many farmers expect renewable diesel to boost soybean prices

Nearly 90 percent of farmers surveyed in the latest Ag Economy Barometer expect a growing renewable diesel industry to boost soybean prices in the next five years.

Jim Mintert is the survey’s principal investigator and director of Purdue’s Center for Commercial Agriculture.

“Thirty-nine percent said that they expect to see an increase in soybean prices of up to 50 cents per bushel out of renewable diesel,” he says. “Twenty-eight percent said that they expect to see a price increase of 50 cents up to $1 per bushel. About 20 percent think we could see an impact of soybean prices that would exceed $1 per bushel.

He tells Brownfield farmers are relatively optimistic.

“So, people are pretty optimistic. They’re expecting to see some growth in renewable diesel. I don’t think people have a real good grip on what the price impacts might be, but people are starting to think about that from a longer-term perspective,” he says. “One reason we asked questions about this was if you’re thinking about what’s going to take place with respect to soybean prices and having a positive impact coming out of renewable diesel, that starts to feed back into your decision making with respect to farmland purchases, machinery purchases, and investing in new buildings and construction. That’s why we’re trying to get a little bit of a baseline in terms of what people think might take place.”

Mintert says they wanted to get a baseline perspective from farmers on renewable diesel because of its projected growth.

“To get more of a baseline, we wanted to make a comparison between what people think is going to take place with ethanol versus renewable diesel. The first question we asked was do you think the U.S. ethanol industry will be larger, smaller, or about the same five years from now. One out of four people in the survey expect to see a larger ethanol industry in five years,” he says. “With respect to renewable diesel, people are more optimistic. Almost half of the people in the survey said they expect to see a larger renewable diesel industry five years from now.”

He compares it to growth in the ethanol industry about 15 years ago.

“There were a lot of announcements. Not all the announcements turned into actual capacity, but it’s clear that the upward trajectory is in place. The question is how rapid is it going to take place, how big will it be? One of the wild cards is what’s going on in the aviation sector— what are we going to do with respect to sustainable aviation fuel. There’s a lot of uncertainty, but certainly some optimism,” he says. “I think most people are pretty realistic in their expectations. Two thirds of the producers surveyed think the impact would be up to $1 per bushel. That’s not too wild. There are a lot of things to think about with the impact of renewable diesel because there are some similarities to ethanol, but there are also some big differences.”

The Purdue University/CME Group Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers.

Audio: Jim Mintert