U.S. EIA numbers paint an interesting picture with what’s been happening with soybean oil and its use in renewable diesel. The expansion in USA renewable diesel capacity has meant that there is a much larger consumption of soybean oil used in biofuel. In general, non-biofuel use should grow at a steady rate of population and economic growth. But the advance in renewable diesel consumption has meant U.S. soybean oil supply is being increasingly taken up by biofuel production with the EIA predicting renewable diesel production to expand by 30% Annually In 2024 and 2025. Currently predictions are that renewable diesel production will average approximately 230,000 barrels per day in 2024, expanding to 290,000 barrels per day in 2025. Production averaged approximately 200,000 barrels per day at the end of 2023. (STEO)

According to Roman Zenon Dawidowicz, Renewable diesel production capacity has expanded significantly in recent years. EIA data shows capacity was at 1.75 billion gallons per year in January 2022 and had reached 3.857 billion gallons per year by November 2023.

Something to watch is the effect of the shift from the Blender’s Tax Credit to the Inflation Reduction Act credits. This could have the effect of adding downward pressure on soybean oil demand, however the net effect will remain to be seen. Soybean oil still needs to be utilized as feedstock in the short term in 2024.