I went down a veg oil rabbit hole of sorts over the weekend, making several new charts related to supply and demand of the commodity items most impacted by biofuel policies.
Perhaps I shouldn’t have said ‘biofuel policies’ but at the end of the day, legislative action is the root cause of dynamic shifts in grain and oilseed demand… which also leads to a host of unintended consequences - both good and bad.
Then lastly today, we will dive into the estimates ahead of tomorrow’s all-important stocks and acreage report, but first - let’s talk about one of the hottest topics in ag.
What’s HOT
HOT Topic
We want all of the lipids (veg oils, fats & greases) and we want them now:
…because we are producing more biomass-based diesels than ever before with a record 408 million gallons of biodiesel and renewable diesel, combined, in December 2023:
Renewable diesel production set another new record high in December, while biodiesel sits near a one-year low:
Traditional biodiesel production has stagnated (and is likely to decline in 2024 with the announcement of two plant closures recently amid tight margins) while renewable diesel production smashes records.
Annual production nearly doubled from 2021 to 2022 and saw a 75% increase from 2022 to 2023:
This seismic increase in biofuel production has dramatically altered domestic soybean oil demand in recent years.
A record 48% of US soybean oil will be used in biofuel production in the current marketing year, while exports sit at a record low for the 2nd year running:
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