A new study funded by the United Soybean Board and soybean checkoff reveals that U.S. soybean farmers received an additional $2.5 billion in net returns over the last four years due to the biodiesel industry's demand for soybean oil. This demand added up to 25 cents in support for the per-bushel price of soybeans. USB Domestic Marketing Chair Lewis Bainbridge says this is a significant return on investment for soybean farmers.
Because the price of petroleum diesel has such a large influence on the price of biodiesel and soybean oil, the study asserts that the biodiesel industry has essentially created a new floor for soybean oil prices. The Food and Agricultural Policy Research Institute at the University of Missouri predicts that soybean oil will be used as the feedstock for approximately 54% of the biodiesel produced in marketing years 2009-2013. And the Institute adds prices for soybean oil and whole soybeans could continue to receive support from biodiesel production.
The study also accounted for the possibility that biodiesel demand for soybean oil will decrease due to a proposed regulation by the Environmental Protection Agency that limits the use of vegetable oils for meeting the draft federal Renewable Fuel Standard. Use of soybean oil in biodiesel manufacturing could fall by approximately 1.5 billion pounds by 2013 if this regulation is not revised. Soybean farmers could see net returns decrease by about $2 billion from projections over that time period.
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