Prices for soybean oil shot to an all-time high last week, powered by growing demand from the biofuels sector.
Soybean-oil futures on the Chicago Board of Trade have soared almost 70% this year, closing at nearly 72 cents per pound on Friday. That topped the previous high hit in 2008. The climb makes soybean oil one of the year’s best-performing assets among a basket tracked by The Wall Street Journal, along with other commodities like lumber, corn and hogs.
Soybean oil is commonly used as an ingredient in foods like cereals, bread, and other snack foods. Demand for the vegetable oil is growing, however, from the biofuels industry, a chief part of the push toward renewable energy highlighted by President Biden’s call for the U.S. to cut carbon-emissions levels in half by 2030.
“Biofuel, particularly renewable diesel, is a key driver of the demand picture on the vegetable-oil side as we look forward,” said Greg Morris, president of Archer Daniels Midland Co.’s agricultural services and oilseeds business unit.
The U.S. Agriculture Department expects the biofuels sector to consume 12 billion pounds of soybean oil in the 2021-22 marketing year—up from an estimated 9.5 billion pounds in 2020-21, according to its monthly supply-and-demand report published in May.