30 Market Development Optimistic outlook for global soy oil U.S. SOYBEAN EXPORT COUNCIL CONFERENCE Jeanine Moyer GROWING DEMAND FOR VEGETABLE OIL FOR USE IN BIODIESEL AND RENEWABLE DIESEL will drive demand for soybeans on the international market. That’s the key takeaway from David Mielke’s supply and demand outlook presentation at the August 2024 United States Soybean Export Council (USSEC) Soy Connext conference in San Fransisco, California. Mielke, director of OIL WORLD, a leading private authority for global research and market analyses for oilseeds, oil, fat, and feed industry, informed international conference attendees that, while the short-term outlook for soybeans remains shaky, he predicts the five-to-ten-year outlook to be strong due to increasing demand for soy oil. INCREASING VALUE “The value of soy oil is on the rise due to an increase in demand for biodiesel and renewable diesel,” says Mielke. Historically, soybean crush margins have been driven by the price of soy meal due to the relatively negligible cost of soy oil. But Mielke explains that the global market has seen a switch in the last 10–12 months as the value of soy oil has far exceeded the value of soy meal, changing the market dynamics for soybeans. Mielke says we are heading towards a global deficit of vegetable oil, primarily driven by lower production of palm, rapeseed (including canola), and sunflower oils. This shift in vegetable oil production, combined with continued demand for biodiesel and renewable diesel, will directly drive the demand for soy oil. Nicole Mackellar, market development manager with Soy Canada, attended the recent Soy Connext conference that saw more than 800 participants from 53 countries, including importers, brokers, distributors, end users, farmers, and industry representatives. She heard Mielke report that he anticipates an increase of 17 million tonnes of soybeans crushed worldwide over the next year. “Conference attendees were encouraged by the long-term outlook of soy value, but we are aware of the potential challenges posed by the surplus of soy meal resulting from increased crushing and the need to identify markets for this byproduct,” says Mackellar. GLOBAL PRODUCTION AND STOCKS The growth in demand for vegetable oil comes at a time when global soybean production is projected to hit an all-time high, Mielke explains. He projects that world soybean production will reach 420 million tonnes in 2024/2025, compared with 391 million tonnes one year ago and 320 million tonnes in 2014. This expected increase in production is largely being driven by higher than anticipated yields in Brazil, increases in Argentina production, and a record crop in the United States. “As global soybean supplies continue to grow, demand prospects will remain shaky in the short term,” reminds Mielke, explaining that Chinese new crop purchases will remain a key swing factor to watch, especially with a recent increase in Chinese soybean imports that could lead to an accumulation of soybean stocks. Mielke says the growth in world rapeseed oil and sunflower oil output over the past two years largely offset a slowdown in world palm oil output. However, this will not be the case in 2024, “creating a bullish supply scenario for vegetable oils in the next 12 months.” “Insufficient growth in world supplies of used cooking oil (UCO), tallow, and other non-food feedstocks in the years ahead will keep dependence high on vegetable oil as a feedstock for biofuel production,” says Mielke. EMERGING MARKETS “Attending the conference has given us valuable insights into global market trends, helping Soy Canada to identify strategic activities required to promote and showcase the high-quality soybean products that Canada offers,” says Mackellar, who also learned that India is an emerging market to NICOLE MACKELLAR, SOY CANADA MARKET DEVELOPMENT MANAGER.
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