Emerging soybean markets

January 25, 2024 | Kriss Nelson

The future of soybean crush, where it could play a role in sustainable aviation fuel (SAF) and other markets, was the highlight of a webinar presented to the Iowa Soybean Association’s (ISA) Soy Leaders Network.

Scott Gerlt, American Soybean Association chief economist, Mac Marshall, vice president of marketing intelligence at the United Soybean Board and Alan Weber, founding partner of MARC-IV, provided their insights during the "Emerging Markets webinar."

Soy crush

“This is the most transformational time we have seen in the soybean industry since China came into the market several decades ago,” says Marshall.

New soybean crush facilities coming online means a better basis for producers to sell their soybeans locally. Specifically, soybean growers in the northern plains, including the Dakotas, are positioned to meet the local opportunity.

“They don’t have to send their soybeans to the Pacific Northwest,” says Gerlt. “They can use them more domestically, a big evolution in the soybean industry. We are seeing big domestic changes.”

Reflecting on the past three decades, Weber recognized the effort it took to make biodiesel and now renewable diesel and SAF a market for soybeans.

“In the 1990s, from a crush perspective, everything was run by (soybean) meal,” says Weber. “We used to hold oil, using stability additives until they could sell it at a reasonable price.”

That’s no longer the case, he says.

“Things have changed in terms of the marketplace. We have seen crush plants that were going to close that didn’t because of the biofuels market,” he says.

Future of SAF and soybeans

What are the incentives to use soybeans for SAF?

Gerlt says the federal-level SAF tax credit may not be high enough to incentivize SAF production, given the production cost. However, some state programs are being added that could be game changers.

Illinois, for example, has a $1.50 per gallon tax credit for SAF loaded on planes in their state. Unfortunately, Gerlt says that may not be a soybean-friendly incentive as it is capped at using 10 million gallons of soybean oil.

SAF produced from fats and oils, such as soybean oil, is only one of the approved pathways to make SAF, Weber says.

The other is alcohol to jet. According to Weber, this involves taking two gallons of ethanol and converting that into one gallon of aviation fuel.

“Economically, when you look at producing SAF from fats and oils, it is probably the most economical way to produce SAF,” says Weber. “However, in the future, alcohol to jet will potentially have a role. Airlines are banking on e-fuels, being able to take carbon dioxide out of the air and converting that into fuel.”

Marine and rail

SAF isn’t the only market soybean producers should have their eye on.

“When I think about aviation fuel as a market, it is important, and it is expected to grow into the future, but it is important to keep an eye on all markets,” says Weber.

New markets like marine and rail could be a pathway for soy, he says.

“Marine and rail are interesting markets that even five years ago we were not getting a lot of traction in,” says Weber.

Currently, Weber says six Class 1 railroads are making biofuels the key in their strategy toward reducing their carbon footprint.

The marine sector's push toward using cleaner burning fuels has already started.

The International Maritime Organization (IMO) 2020 regulation, starting Jan. 1, 2020, began pushing for a reduction in sulfur emissions by 80% by switching to lower sulfur fuels in marine use.

“IMO 2020 is specific to sulfur emissions, but with companies looking to reduce their carbon footprint, we are seeing a push toward biofuels,” says Weber. “The Department of Energy has been looking at the potential of biofuels, and there is potential biofuels could represent at least 30% of the fuel market for U.S. vessels by 2050, including renewable diesel and biodiesel.”

Marshall says he is excited for the future of soy in transportation and infrastructure.

“That is the lifeblood of how we connect farms to market,” says Marshall. “That is how our harvest gets into domestic and international markets. It’s an end use that facilitates more efficient use of soybeans.”

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