Soybean Processing: A Booming Industry on the Rise

Soybeans, the versatile crop that has become a staple in various industries, is set to witness a significant surge in processing capacity. This transformation promises new opportunities for domestic soybean consumption and an expanded market for farmers. Join us as we delve into the exciting developments in the soybean processing industry.

Expanding Crush Capacity: Fueling Growth

Soybeans rarely find themselves used in their whole form. Instead, they are “crushed” to produce valuable products such as soybean meal and soybean oil. The growing demand for renewable diesel has been a major driver behind the surge in crush plant announcements. Crushing soybeans to produce soybean oil for renewable diesel has gained traction and is projected to continue its upward trajectory. This increased demand naturally necessitates the growth of crush capacity in the United States.

A remarkable 23 plant expansions have been announced, with a potential to add around 750 million bushels per year in crush capacity. This not only provides additional avenues for farmers to sell their beans but also ensures a larger supply of soybean meal and oil for the domestic market.

A Promising Collaboration: Renewable Diesel and Crush Plants

As the renewable diesel industry continues to thrive, its synergy with the soybean processing sector becomes evident. Several announced renewable diesel plants have joined forces with crush plant expansions through joint ventures. Out of the 23 crush plant announcements, 13 are dedicated to new plants, while 10 focus on expanding existing ones. Some of these projects are already in progress or completed, painting a vivid picture of a growing industry. However, it is important to acknowledge that the actual scale of expansion remains uncertain and is contingent upon factors such as state and federal policies, permits, and financing.

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Mapping the Landscape: Soybean Crushing Plants in the U.S.

The United States currently boasts approximately 60 crushing plants, with a practical capacity of about 2.2 billion bushels per year. These plants are strategically located, with the majority concentrated in the traditional soybean-producing region from Ohio to Missouri, extending northward to Minnesota. This proximity to the fields ensures minimal transportation time between cultivation and processing. Another cluster of crushing plants can be found in the Southeast Seaboard, which is home to a significant poultry population that heavily relies on soybean meal.

However, the newly announced crushing plants demonstrate a shift towards the west and north. This change in trajectory aligns with the expanding soybean production in those regions. The Northern Plains, previously more export-oriented due to the absence of local crush capacity and animal agriculture, are now witnessing an uptick in soybean processing activities.

Pioneering States: Leaders in Soybean Crush Capacity

Iowa takes the crown with the highest soybean crush capacity in the nation, boasting over 1.3 million bushels per day of nameplate capacity. It is closely followed by Indiana and Illinois in terms of total crush capacity. While Indiana anticipates limited capacity increases, Illinois has announced an additional 445 thousand bushels per day of nameplate capacity. Notably, North Dakota, Nebraska, and Louisiana emerge as the states with the highest percentage increases: Nebraska and Louisiana might nearly double their capacity, and North Dakota could see a staggering sevenfold increase if all the announcements materialize.

Shifting the Flow: Impact on Soybean Imports and Exports

The surge in crush capacity is set to reshape the interstate flow of soybeans. States with a ratio exceeding 100% will need to import soybeans to maximize their capacity, while states below the threshold will likely become net exporters. In the Southeast, states such as Alabama, Georgia, South Carolina, and Virginia, known for their sizable poultry populations, tend to import soybeans. Georgia, for instance, possesses a crushing capacity that surpasses its own production by a factor of 14. The transportation advantage enjoyed by whole beans further incentivizes local crushing. With the planned expansion, Louisiana is poised to transition from a net exporter to a net importer of soybeans, driven by the demand for soybean oil in large renewable diesel plants located in the New Orleans area. Similarly, North Dakota’s utilization of its soybean production could increase from less than 10% to approximately 50%, while Nebraska aims to elevate its utilization from 42% to 80%.

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The Road Ahead: Building Capacity and Meeting Demand

The timeline for the capacity buildout extends over several years, with 120,000 bushels per day of increased nameplate capacity already in operation. From 2023 to 2025, an additional 430 to 530 thousand bushels per day of capacity are planned, growing to 800,000 bushels per day in 2026. However, completion of some long-term projects is contingent upon market conditions and other factors.

The expansion of the soybean sector, driven by the 23 announced crush plant projects, has the potential to increase crush capacity by 34%. However, as previously mentioned, the realization of these projects hinges on various factors. Among them, the pace of renewable diesel growth plays a pivotal role. Strong margins for crushers have spurred significant investments, empowering farmers with higher prices and greater delivery options. Expanding output will enable the sector to continue providing both food and sustainable fuels to meet the ever-growing demand.

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