The boom in production of renewable diesel fuel has pushed U.S. soybean oil prices so high the commodity is uncompetitive on the world market, said USDA analysts on Tuesday. Drought in Argentina, the world’s leading soyoil exporter, also will be a major factor in the lowest volume of soyoil imports worldwide in five years.
“As a result of tighter global exportable supplies and higher industrial consumption, soybean oil as a percentage of global vegetable oil consumption is forecast to fall below 30 percent in 2022/23 for the first time in nearly a decade,” said the monthly Oilseeds: World Markets and Trade circular. Palm, rape and sunflower oil will fill the gap in vegetable oil supplies.
Some 44 percent of U.S. soybean oil will go to biofuels during the current marketing year, said the monthly WASDE report. Two years ago, the biofuel share of soyoil consumption was 37 percent.
Argentina’s soybean crop was estimated at 27 million tonnes, down by 38 percent from last year due to drought. Rain in late March arrived too late to help the crop. Argentina is the third-largest grower, behind Brazil and the United States. Brazil is harvesting a record-large soy crop of 154 million tonnes, 18 percent larger than last year.
“For soybean oil, imports are forecast to be the lowest in five years driven by lower Argentina exportable supplies and strong U.S. renewable diesel production, which has rendered U.S. soybean oil export prices uncompetitive on the global market,” said the USDA circular. “Soybean oil trade is further dampened by the announcement that the Brazil biodiesel blend mandate has been raised to 12 percent, putting further pressure on exportable supplies.”