“An increase in vegetable oil demand for biodiesel production could support soybean oil and soybean prices during the 2013-14 marketing year at higher levels than are now anticipated,” Good said. “Such an outcome could result in a very interesting dynamic in future years. Higher soybean oil and soybean prices relative to other crop prices in 2014 would be expected to stimulate more soybean production if biodiesel demand was expected to remain strong. This would be in contrast to the ethanol-driven increase in corn acreage since 2007. The increase in soybean production and processing in order to meet expanding soybean oil demand could then result in a surplus of soybean meal and lower prices for that product with an indeterminate effect on soybean prices beyond 2014,” he said.

Good concluded by saying that there is considerable uncertainty about U.S. biodiesel production beyond 2013 because production is primarily policy driven. “That is another factor that can be added to the long list of factors that will impact soybean prices over the next 18 months,” he said.