Soybeans: Biodiesel Pours Savings into Feed Supply

Livestock and poultry farms benefit from increased biodiesel demand. That’s because the more biodiesel that gets used, the more savings animal ag farmers experience on their soybean meal costs.

Because biodiesel creates greater demand for soybean oil, more soybeans get crushed. The extra crush puts more soybean meal on the market, reducing feed costs.

Despite being located in a state that has no active biodiesel plants, South Dakota Soybean Processors, like all crushing facilities, feels the impact of biodiesel’s demand for soybean oil. The industry impacts the entire soybean market, including meal customers, says Tom Kersting, CEO of South Dakota Soybean Processors.

“Even if we don’t sell soybean oil directly to a biodiesel plant, we’re still impacted by biodiesel production that takes place elsewhere in the United States,” he explains. “Here in South Dakota, we’re not close to the coasts, but we’re still impacted by the export markets. Biodiesel has a similar overriding effect.”

Outlining biodiesel’s impact, a checkoff-funded study found that biodiesel production saved livestock and poultry farmers up to $4.8 billion dollars through lower soybean meal costs between 2005 and 2009.

“Biodiesel markets can consume large volumes of soybean oil in a short period of time,” says Kersting. “That kind of demand stimulates crush margins and produces more meal.”

More biodiesel purchased leads to a greater impact on U.S. soy’s biggest user, animal ag.

“We’re very supportive and excited about biodiesel,” adds Kersting. “Any additional use of soybean oil, like biodiesel, is just going to lead to more crush, and that helps us, and in this case, can help other customers.”

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