Global circumstances have created another Agricultural Cycle. With grain inventories falling and demand from emerging economies continuing to grow, the world will look to North America to provide more food crops. North America is already the largest exporter of wheat, corn and soybeans.
In North America, the rapid growth of renewable diesel (RD) and sustainable aviation fuel (SAF) production is expected to accelerate oilseed and phosphate demand growth during the next several years. Demand growth is driven by state and national low carbon intensity fuel standards (LCIFS). So far, California (2010), Oregon (2015), Washington (2023) and Canada (2023) have passed legislation mandating LCIFS. More states especially in the Corn Belt are expected to follow.
RD is produced by hydrogenating vegetable oils or animal fats in a refinery that is similar to a petroleum refinery. RD is a perfect substitute or drop in for petroleum diesel and has none of the cold weather or other performance issues of biodiesel (a blend of petroleum diesel and non-hydrogenated biodiesel). The implementation of low carbon intensity fuel standards first in California and then by other states is driving the development.
This surge in the North American production of RD and SAF is set to consume an estimated 2 billion tons of soybeans per annum, roughly 50% of all US soybean production by 2025-26. This growing demand, or pull for grains, is due to create elevated grain prices and thus a need for fertilizers to obtain higher crop yields.
