High Oleic Soybeans May Account for 25% of U.S. Acres in Ten Years
Soy Insights declares in its latest outlook assessment that both traditional and high oleic soybean oils will see growth over the next five years, but there are factors that can affect the extent of this growth.
A key area in question remains to be high oleic soybeans. The United Soybean Board projects that within ten years high oleic soybeans will account for 25% of all U.S. soybean acres planted as food manufacturers opt for hydrogenated oil alternatives.
Richard Galloway, a vegetable oil expert working with the United Soybean Board says, “Soybean oil lost about 4 billion pounds of market to the trans fatty acid labeling and regulation that played out around 2006, and we’re probably going to lose 2 billion more due to FDA’s proposal to withdraw the Generally Recognized As Safe (GRAS) status of partially hydrogenated oils.”
Worldwide deregulation of high oleic soybeans is critical to offsetting this market loss, but Europe is still blocking such action, causing a trade barrier that is hampering the development and global commercialization of the crop.
Two other key factors affecting future growth are the Renewable Fuel Standard (RFS) and export markets.
Currently the U.S. uses 24% of its soybean oil output as a feedstock for biofuel production. If this usage is lost or significantly cut, the U.S. crushing industry would see significant damage to its margin structure.
Because of geographical proximity, the greatest export potential for U.S. soybean oil lies in Canada, Mexico, Central America, and the Caribbean. India, China, and Argentina are all large markets, but because of the price advantage of palm oil and tax policies, growth in market share for U.S. soybean oil in these countries is negligible. However, even in the top potential markets, transportation and infrastructure bottlenecks and difficulties could dim this potential.
A final factor affecting the potential future growth for U.S. soybean oil is palm oil. In 2004/2005 palm oil became the world’s top vegetable oil. Its perennial nature, its profitability, and new higher-yielding varieties are all contributing to palm oil’s higher yields and growing global market share.