The weekly Commodity Report in EGG-NEWS has documented the rise in the price of soybean oil over the short term with prospects for further escalation.  As with conversion of corn to ethanol, soybean oil is diverted to biodiesel basically using food for fuel.  In recent days, the world supply of vegetable oil has been complicated by a decision by the Government of Indonesia to ban exports of some palm oil products.

Soybean oil has tripled in price over two years impacting restaurants and consumers.  The prospect for more conversion of vegetable oils to biodiesel is confirmed in reports by the U.S. Energy Information Administration that consumption of biodiesel will increase three-fold from 2021 through 2024.  The initial forecast of the availability of vegetable oils in 2021 preceded the conflict in Ukraine that may deprive the World of more than 70 percent of the supply of sunflower oil.  Spring planting and subsequent fall harvesting of sunflower in 2022 will be constrained by hostilities and supplies will be affected if crushing plants near export ports on the Black Sea are damaged.

Economists agree that the doubling in demand for soybean oil for biodiesel is responsible for the progressive escalation in price and is directly attributable to the Renewable Fuel Standard.  Driven by government policy and supported by bipartisan representatives and senators elected  from states with strong agricultural production, biodiesel supply will increase from approximately 0.6 billion gallons in 2020 to 5 billion gallon in 2024.  The demand for vegetable oil was a major factor in the sharp swing from corn to soybean acreage to be planted in 2022.  Irrespective of the ultimate proportions of corn and soybeans planted in 2022, commodity prices will continue to rise with the force of a fully loaded semi running with the pedal to the metal.