Demand is one of the driving factors that gives value to the soybean market. We’ll learn more from Dave Ripplinger, Extension Bioproducts and Bioenergy Economist.
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Demand is one of the driving factors that gives value to the soybean market. We’ll learn more from Dave Ripplinger, Extension Bioproducts and Bioenergy Economist.
What is In the Pod: Soybean Updates?
The NDSU Extension weekly podcast In the Pod: Soybean Updates delivers timely insights and expert advice on soybean production.
Bruce Sundeen:
You're listening to In the Pod, Soybean Updates, a weekly trek into the latest soybean information from NDSU Extension. What makes a soybean crop valuable? There are plenty of quality characteristics, but in the end, value comes from demand. Nowadays, North Dakota soybeans can be used in multiple ways. We'll learn more from Dave Ripplinger, extension bioproducts and bioenergy economist. Dave, tell us about the North Dakota soybean crush plants.
Dave Ripplinger:
Yeah. Absolutely. So North Dakota is the home of two new soybean crush plants. One came on last year, one the year before that. It's a new in state destination for the soybeans that we've been growing. A great opportunity, a great way to increase the price basis of North Dakota soybeans.
Bruce Sundeen:
How do these plants impact the soybean growers?
Dave Ripplinger:
It provides that local buyer, a very large local buyer for these soybeans and that is different than how it used to be, which was export for the most part. So, North Dakota soybean growers have a local buyer, a stronger basis, so relatively higher price. They also have the availability of feed in the local market and they also have, as a side, something for their hired men to do in the winter which is drive soybeans to the crush plant. For a farmer, you know, soybeans in general have been a very beneficial crop in terms of income, working in rotation, and the like. This only solidifies that place for soybeans in the state. You know, higher income, stable income, more economic activity. And again, too, there's all of these secondary folks who benefit, you know, in terms of tax generation, wealth creation, and the like.
Bruce Sundeen:
What about the California low carbon fuel standard? How does that affect soybean demand?
Dave Ripplinger:
It's actually really important. So California has a state policy that incentivizes the use of low carbon fuels. Biofuels made with soybean oil have a very small carbon footprint and so they're in high demand. And so, pushing back through the supply chain that gets to soybean oil, soybean crush, and even back to the soybean farmer. And so, that policy from Sacramento was created this very large market for low carbon fuels and that soybean oil, soybean oil based biofuels really hit the spot and that has been part of the justification for the construction of these crush plants. We now have oil in state. We have oil in the country. It's very valuable here. So why would we send it abroad?
Bruce Sundeen:
Is soybean production affected by the new aviation fuel policy?
Dave Ripplinger:
There's a lot of interest and work being done to develop a market for sustainable aviation fuel. So, this is low carbon jet fuel, that can have varying characteristics. You can make it with vegetable oil, soybean oil. That market is relatively young globally, but there's a lot of activity especially in The United States because we have vegetable oil and notably soybean oil. It's dependent on both policy and in for the most part, it's actually European policy that's driving that market. The US also has a tax credit that could support production of SAF, sustainable aviation fuel. But there's also a little bit of work that has to be done and then we have the the buyer. So, we have a bunch of different airlines who are for the most part regulated parties. So, they have to buy and use SAF if they, for example, fly to Europe. And so, that creates this market pull, this market demand.
Bruce Sundeen:
Dave, is there anything else important related to soybeans?
Dave Ripplinger:
We're at a really interesting time for a lot of crops. You know, soybeans and soybean oil and soybean meal are a really important part of North Dakota agriculture, global agriculture. Probably the most interesting thing in all of this for decades, it was the price of the soybean meal, which is essentially protein, vegetable protein that we'd feed to animals to create animal protein. That's been the driver of the soybean market. And more recently, it's now soybean oil. And even though it's only about 20% of the seed, that 20% is now disproportionately valuable. And so, that's leading to all of these changes and will keep soybeans, you know, in rotation in North Dakota, paired on top of all of those other benefits that we've seen for the rest of the time. I mean, it's worked out really really well.
Bruce Sundeen:
Yeah. So, it's not dependent on China exports.
Dave Ripplinger:
People still need meal and now we really value oil. We already had a good place for it and now it's even better.
Bruce Sundeen:
Thanks, Dave. Our guest has been Dave Riplinger, extension bioproducts and bioenergy economist. You're listening to In the Pod, soybean updates, a weekly trek into the latest soybean information from NDSU Extension.