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Soybean Oil Faces Competition in Renewable Diesel Boom | RBN Energy

The rise of renewable diesel (RD) is creating a scramble for feedstock, the raw materials used to produce the fuel. This has major implications for the soybean oil market, according to a recent article by RBN Energy.

Soybean oil has traditionally been the king of RD feedstocks, but its dominance is being challenged. RBN Energy notes that used cooking oil and beef tallow are gaining ground due to their lower carbon intensity, which translates to more government subsidies. This has caused soybean oil's market share to drop from 55% in early 2022 to 35% in December 2023.

The surge in RD demand initially pushed soybean prices up to $17 per bushel in 2022, nearly double the price from mid-2020. This price increase is seen as a direct result of the increased demand for soybean oil as a fuel source. However, prices have come down recently to below $12 per bushel.

The RD boom is also driving investment in soybean crushing capacity, the process that extracts oil from soybeans. This could potentially cut US whole soybean exports in half by 2026, says RBN Energy.

Meanwhile, the used cooking oil market is experiencing its own growing pains. While used cooking oil is now a valuable commodity, concerns exist about "mislabeled" imports, potentially impacting the integrity of the bio-feedstock race.