Soybean Oil Mills

Traditionally one of the largest U.S. crops, soybeans are especially valuable because the same automated presses yield two important products with closely linked markets--soybean oil and soybean meal. Unfavorable weather conditions hindered soybean production in the United States in the early 2000s, but the U.S. share of the world soybean harvest climbed back to 40 percent in 2005. In 2009, U.S. farmers planted a record 77.5 million acres of soybeans, and production for the year was about 3.26 billion bushels, up from 2.96 billion bushels in 2008, which was the fourth largest harvest on record. Export markets and increased use of soybean oil in biodiesel fuels offered the most promise for the industry in the late 2000s.

Uses for soybeans have evolved and expanded. In the 1950s and 1960s, meat processing using soy flour as protein filler was the largest food market for soybean meal. As this process became outmoded, improved refining techniques yielded isolated soy proteins and concentrates having a wider range of applications and little or no independent flavor. Those ingredients grew in popularity after legislation freed meat product manufacturers from regulations that insisted on prominent package labeling of the presence of such ingredients. In the 1970s and 1980s, increasing desirability of high-protein animal feeds, and soy's enhanced status as a healthy ingredient in food, led to increased demand for meal. Soybean meal and oil production volume increased proportionally.

Although domestic use of soybean oil increased throughout the late 1990s and early 2000s, considerably more soybean was processed for soybean meal than for oil. For example, of the total 1.5 billion soybean bushels crushed in 2003, about 64 percent was crushed for soybean meal.

In 2008, U.S. soybean production totaled 2.96 billion bushels. Of that total, 1.28 billion bushels were exported. The top five states in soybean production in 2008 were Iowa with 444.8 million bushels, Illinois with 427.7 million bushels, Minnesota with 264.1 million bushels, Indiana with 244.3 million bushels, and Nebraska with 225.9 million bushels. Average price in 2008 was $9.65 a bushel, down somewhat from $10.10 in 2007 but significantly more than the $6.43 per bushel experienced in 2006. Yield continued on a downward trend, dropping from 41.7 bushels per acre in 2007 to 39.6 bushels per acre in 2008, after reaching a five-year high of 43.1 bushels per acre in 2005.

U.S. soybean oil exports reached 600,393 metric tons in the mid-2000s, with more than 25 percent going to Mexico, 60 percent to the Mexico/Central America/Caribbean region, and 20 percent to Asia. Worldwide, Brazil accounted for almost 25 percent of the 241.7 million tons produced in 2008, with 60 million metric tons, and Argentina produced about 21 percent with 51 million tons.

Trends in the industry in the late 2000s generally favored greater acceptance and more widespread use of soybean products, especially in the form of isolated soy proteins and concentrates. Isolated soy proteins (ISPs) were shown to equal the protein quality of milk and egg protein, making them logical substitutes for dairy protein because of their lack of fiber and 90 percent protein content. ISPs have uses in coffee creamers, protein-fortified beverages, weight-loss products and body-building supplements, certain medical foods, and milk-free infant formulas.

In addition, research by the United Soybean Board, the National Soybean Checkoff Program, and others in the industry led to the release of a low-linolenic soybean whose oil does not require hydrogenation, which is the process that leads to trans fat. One of the new products on the market in 2009, Pour 'n Fry NT(TM) deep-frying oil (made by Bunge Oils), was made with low-linolenic soybean oil and canola oil and advertised zero grams of trans fat per serving. According to Soy Industry Connection, U.S. farmers planted between 3 million and 3.5 million acres of low-linolenic soybeans in 2008. Major seed companies such as Asoyia, Pioneer, and Monsanto offered the new varieties.

The increased interest and investment in alternative energy sources in the early twenty-first century offered another major opportunity for soybean processors. Significant technological advances in the production of biodiesel, a biodegradable, nontoxic, lower-emitting alternative to petroleum diesel fuel, began in the late 1990s. An estimated 500,000 gallons of biodiesel fuel was sold in 1999. Biodiesel is produced from soybean oil and other vegetable oils and fats through a refinery process where alcohol is used to remove glycerin, a by-product of biodiesel production. To ensure performance, fuel-grade biodiesel is produced to strict industry specifications. The National Biodiesel Board estimated that 75 million gallons of biodiesel fuel was sold in 2005; by 2008, an estimated 700 million gallons of U.S. biodiesel was being produced. Just over one-third, 34 percent, of the raw material to make biodiesel came from refined soybean oil. The National Biodiesel Board also forecast that 2.2 billion pounds of soybean oil would be used for biodiesel production in 2009-2010. Kenneth Doll of the USDA Agriculture Research Service told Southeast Farm Press in April 2009, "The production of U.S. biodiesel, which now accounts for over 75 percent of soybean oil's industrial use, experienced an annual average growth rate of an astonishing 90 percent for most of this decade."

Large corporations involved in the industry in the late 2000s included Ag Processing Inc. of Omaha, Nebraska, one of the largest soybean processors in the world. A 250,000-member co-op, Ag Processing had 2008 sales of $2.6 billion. Diversified giant Cargill Inc., the second largest private corporation in the United States, was also an industry leader, with sales of $120.4 billion. Other top players in the industry included Archer Daniels Midland Company (ADM) of Decatur, Illinois, with 2008 revenues of $69.8 billion; Dupont subsidiary Pioneer Hi-Bred International Inc., of Johnston, Iowa, with $1.4 billion in sales; and St. Louis-based Monsanto Company, which acquired the major seed company Delta and Pine Land in 2007 and had sales of $11.3 billion in 2008.