Rapid Growth in US Renewable Diesel Production Transforms Feedstock Markets
Source: The DairyNews
The landscape for US renewable diesel production has undergone significant changes in recent years, comparable to the growth experienced by ethanol and biodiesel over the past two decades, according to a recent press release from the US Department of Agriculture.
This surge in renewable diesel production and capacity is driven by federal and state policies aimed at reducing emissions. Renewable diesel, similar to biodiesel, is produced from renewable feedstocks such as vegetable oils, animal fats, and used cooking oil (UCO). However, renewable diesel undergoes hydrogen treatment, making it chemically equivalent to petroleum diesel, allowing for higher blending levels and transportation via existing pipelines.
As a result, the US is rapidly increasing imports of animal fats and vegetable oils to support renewable diesel production and replace feedstocks like soybean oil, which have been redirected to renewable diesel production.
Domestically, the expansion of US soybean crushing has increased oil production, driven by high soybean oil prices and strong crush margins. This has led to a decline in US soybean exports due to increased Brazilian supplies and slower global import demand growth.
Additionally, US soybean oil premiums have soared above global vegetable oil prices, resulting in a significant drop in US exports. In 2023, the US became a net importer of soybean oil for the first time. Conversely, higher soybean crushing has increased soybean meal exports, especially amid Argentina’s drought, which has boosted US meal exports with the potential for continued growth.
While various factors could impact the US biofuel, animal fats, and oilseed markets, renewable diesel production is expected to continue growing and altering feedstock markets. The growth rate will depend on federal and state policies, feedstock availability, and sustained US soybean meal export gains.
As a result, the US is rapidly increasing imports of animal fats and vegetable oils to support renewable diesel production and replace feedstocks like soybean oil, which have been redirected to renewable diesel production.
Domestically, the expansion of US soybean crushing has increased oil production, driven by high soybean oil prices and strong crush margins. This has led to a decline in US soybean exports due to increased Brazilian supplies and slower global import demand growth.
Additionally, US soybean oil premiums have soared above global vegetable oil prices, resulting in a significant drop in US exports. In 2023, the US became a net importer of soybean oil for the first time. Conversely, higher soybean crushing has increased soybean meal exports, especially amid Argentina’s drought, which has boosted US meal exports with the potential for continued growth.
While various factors could impact the US biofuel, animal fats, and oilseed markets, renewable diesel production is expected to continue growing and altering feedstock markets. The growth rate will depend on federal and state policies, feedstock availability, and sustained US soybean meal export gains.
