Soybean Surge Sparks Investments

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Researched by Industrial Info Resources (Sugar Land, Texas)--A rise in global demand for soybean oil has been witnessed in recent years. Obtained from the seed of the soybean plant, the oil is known for containing polyunsaturated fats, and being rich in vitamins E and K.

As such, the use of soybean oil has grown in both traditional cooking and modern industrial sectors. With a smoke point of 234°C, it is considered less harmful as compared to other oils like olive, grape seed, sesame and vegetable oil. It is a popular ingredient for processed foods ranging from various snacks and baked foods to dressings like mayonnaise, sauce and margarine.

Soybean oil is also utilized in pharmaceuticals as an excipient or carrier for drug delivery systems, including formulations for oral and intravenous medications. Additionally, it has applications in various industrial sectors including cosmetics, biodiesel, lubricants, solvents, paints, coatings and industrial chemicals, making it an attractive option for sustainable alternatives to petroleum-based products.

As of 2022, soybean oil comprised about 29% of global vegetable oil production, with U.S. soybean oil contributing a 6% share to the international market. As projected by the Food and Agriculture Organization (FAO) in its 2023-2032 agricultural outlook, global soybean production is expected to reach 415 million tons by 2032, which is more than double the combined output of other oilseeds (189 million tons).

Given short-term issues like the lack of sunflower oil imports due to war in Ukraine, countries which were previously major consumers of sunflower oil have now switched to palm oil and soybean oil, leading to an additional surge in demand. The demand is further heightened by the diverse application of edible oils in the production of biofuels, especially as countries aim to achieve net-zero carbon emission targets by reducing their reliance on fossil fuels.

Industrial Info is tracking 232 projects worth US$10.87 billion aimed at the extraction of soybean oil. About 57% of the planned spending is for grassroot developments while 23% is for plant expansions. Subscribers to Industrial Info's Global Market Intelligence (GMI) Food & Beverage Project Database can click here for a list of detailed project reports.

North America is driving more than US$7 billion worth of the planned spending, accounting for 66% of the total investment.

By country, the majority of planned spending is being tracked in the U.S., amounting to US$6.93 billion. The significant U.S. interest in soybean oil production stems from various factors, including escalating demand for renewable fuels such as biodiesel and the versatility of soybean oil applications. Some of the other countries with potential investments are Brazil, China, United Arab Emirates, Russia and Canada.

The key players in the market are Bunge Limited (NYSE:BG) (St. Louis, Missouri), AG Processing Incorporated (Omaha, Nebraska) and CHS Incorporated (NASDAQ:CHSCP) (St. Paul, Minnesota), with a cumulative investment of US$2.87 billion.

As the leading investor, Bunge has 21 plant expansion and upgrade projects in the U.S., Brazil and Canada. The one with the highest investment value is in Morristown, Indiana, where the company is installing new machinery and equipment plus auxiliary systems at an existing 5.3 million-bushel soybean processing plant to process new soybean meal and increase production by 4.5 million bushels. This project is expected to reach completion by November 2025. Subscribers can click here for the project report and click here for the related plant profile.

Overall, projects worth 42% of the total spending are in their planning phases and 41% are under construction, with the remaining 17% being engineered. A majority of the projects are scheduled to reach completion between the years 2024 and 2027.

One of the most prevalent hurdles faced by the market for soybean oil is the availability of alternatives such as palm oil, olive oil, sunflower oil, rapeseed oil and canola oil. Another challenge includes recovering from the supply-chain crunch that took place in the last few years for nearly all edible oils, resulting in supply fluctuations. However, owing to its milder properties and versatile applications, thus making it a good alternative to various cooking oils, it is anticipated that the production of soybean oil will continue to increase.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 Trillion (USD).