The market for soybean oils has potentially been stalled by the Environmental Protection Agency, reports The Wall Street Journal. Prices for the oil had hit record highs last year as a result of government incentives to make it into diesel fuel.
In December, the EPA proposed to mandate less use of biomass-based diesel through 2025 than expected, cutting back on the value of credits the agency issues to makers of biofuel. This caused futures of the product to drop more than 15 percent in the span of one week.
Processing soybeans yields both meal, which is used to feed farm animals, and oil, used in foods and as fuel for machines. According to the Agriculture Department, 44 percent of U.S. soybean oil production will go toward biofuels rather than food, up from 40 percent in 2022.
“For decades, oil was the residual product that companies had to figure out a way to get rid of after selling meal, the really valuable stuff,” said Scott Irwin, an agricultural economist at the University of Illinois Urbana-Champaign. Increased demand means the oil went from making up 33 percent of a soybean’s value to nearly 50 percent until the EPA’s proposal.
Some fear that the EPA’s decision could turn support away from the soybean oil market; however, global demand for protein may stabilize the issue. Full Story (Subscription Required)
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