February 9, 2021
Alex Busch, senior merchandiser at CHS, explains what’s causing higher crush capacity and how long it could continue.
U.S. soybean crush capacity is reaching new heights. What role does foreign supply and demand have in this? Alex Busch, senior merchandiser at CHS, shares what’s happening with soybean processing.
“Most of the additional demand stems from tighter soybean supply in South America and some additional growth as the Chinese pork industry recovers from African swine fever,” explains Busch. “While U.S. demand continues to be strong, it’s the incremental demand from around the globe that is driving crush levels to record highs.”
The global COVID-19 pandemic has also impacted U.S. soybean crush, particularly the refined oils business, according to Busch. “With sporting venues closed, restaurants slowing down and schools moving to distance learning, those sources of dependable demand really scaled back,” says Busch. “On the flip side of that, renewable diesel has entered into the refined oil segment. As that market share starts to grow, it offsets reduced demand from the foodservice industry.”
What does this mean for U.S. farmers? Busch believes this is good news for soybean growers making marketing decisions.
“These global drivers are creating additional demand points for U.S. grain and result in lower ending stocks, allowing American farmers to sell for a higher value,” says Busch. “We expect these current crush levels to continue into the 2021-2022 marketing year.”
