Whether you are a soybean buyer, crusher, or refiner, you need to evaluate soybeans not only on their protein and meal potential, but also on the value of the oil. Knowing the value of the oil you are purchasing can help you better evaluate your beans and market your oil.
Now, customers can compare characteristics of soybean oil from different countries and see for themselves how not all soybean oil is created equal.
Not All Soybean Oil Is Created Equal
There are many reasons why soybean oil from U.S. Soy produces high quality oil at the greatest value for customers. Point of origin impacts the quality of soybean oil due in part to growing conditions, storage, harvest, transportation as well as weather. These factors all affect the refining cost, as well as the overall oil production.
While refiners have recognized this impact for years, both quantitative and qualitative evidence to reference on the subject has lacked. However, a recent study, “Processing Characteristics of Soybeans From Different Countries,” provides benchmarks for the refining process of soy oils from different origins, showing the advantages of U.S. Soy oil.
The study “Processing Characteristics of Soybeans From Different Countries,” was conducted by Fan Yang, Chief Engineer and researcher on China Oils and Fats. In this study, the quality differences of soybeans from the Pacific Northwest U.S., Gulf U.S., Argentina and Brazil were analyzed, and the relationship between quality indexes of raw material and product quality was studied. Fan Yang’s focus was the impact on crude oil quality, refining consumption and refining rate. He also looked at resulting cost estimates for processing.
The primary indicators tested for included impurities, moisture, crush rate, and damaged kernels. The study also analyzed total inputs, energy required and refining rate, as well as soybean meal yield and other indicators of soybeans processed in different regions and at different scales with varying processes and equipment, involving different climatic conditions and diverse enterprises.
After looking at the differences in refined soybean oil from various countries, Fan Yang concluded U.S. Soy showed advantages over that of other origins.
Why The Advantage?
Throughout the study U.S. soybeans beans scored systematically higher than South American beans. Fan Yang found that differences in soybean sources’ latitudes and environment impacted the results. The study also determined that pre- and post-harvest conditions in the U.S. also play a major role in U.S. Soy’s ability to deliver consistent and high-quality soybean oil.
For example, U.S. soybeans not only have better post-harvest storage and drying conditions, but the country’s infrastructure and ability to transport soybeans swiftly leads to less damaged soybeans being delivered to customers.
- Soybean oil produced from U.S. soy results in the best quality crude soybean oil, has the lowest refining cost, and the highest refining rate.
- This quality attribute is due in part to the lower damage rates observed on beans during arrival. The other factor that influences quality is pre-harvest conditions and the post-harvest storage.
- The crude oil produced by U.S. soybeans have the merits of:
- Lower Neutral Oil Loss (NOL).
- Lighter in color.
- Lower levels of non-hydratable phospholipids and refining materials consumption.
- Lower rates of free-fatty acids.
- Lower power consumption in the refining process.
These factors affect the refining and crushing cost, as well as the overall production of soybean oil. For example, the lower rates of NOL seen in soy from the U.S. mean crushers can produce more high-quality oil from their crude oil, which can then be sold to refiners. The study shows that when it comes to producing high-quality crude soybean oil in an efficient manner, U.S. Soy ranks No. 1.
U.S. Soy Equals Quality
The study found that the damage (physical damage and heat damage) rate of soybeans in the United States is lower when compared to soybeans from South America. This is significant since damaged soybeans produce lower quality meal and oil.
For example, damaged soybeans may decrease the refining rate of crude soybean oil, increase the inputs and energy required, and reduce productivity of the processing equipment. More damaged and immature kernels in soybean raw materials also result in a poorer quality soybean oil. It also makes the follow-up processing more difficult, resulting in lower yield, higher processing costs and lower product quality.
Soybeans can suffer damage before and after harvest and during storage and transportation, leading to poorer quality soybeans and lower quality soybean oil. However, due to climatic conditions, farm storage, and superior logistics, the U.S. consistently produces quality soybeans, and therefore higher quality soybean oil.
For example, heat damage generally occurs when the harvested high-moisture soybeans can’t be dried in a timely manner due to the poor ventilation during storage and transportation. Poor dryer control can also overheat and damage beans. This results in heat, grease, crispness, color burn, etc., which results in beans of inferior quality, and ultimately a lower quality soybean oil.
Thanks to better post-harvest storage and drying conditions, the country’s infrastructure and ability to transport soybeans, U.S. farmers ensure customers receive high-quality soybeans.
From the fields to grain elevators, and from our vast rail network to our inland-waterway system, U.S. Soy’s transportation infrastructure network ensures consistent, on-time delivery. Our supply chain meets and exceeds customers’ needs — no matter the shipment size, product type, location or time of year. U.S. Soy’s established and reliable multi-channel transportation infrastructure means our customers generally experience shorter delivery times when they buy U.S. soy versus soy from other sources. This multi-modal transportation network allows for troubleshooting when needed — if a port is closed, we can rely on other available ports or transportation methods such as rail or highway to bring goods to market without losing time.
Quality Influence Refining Rates and Yields
In terms of refining rates and yields, U.S. Soybean oil (fresh and long-term storage) leads in comparison to South American beans. In Fan Yang’s study, soybean oil from the Pacific North West came in first overall with a refining rate of 98.2. Long-term storage U.S. soybean oil also topped the list and ranked higher than oil from South American beans with a refining rate of 98.01.
Fan Yang’s research also found a pattern when comparing the refining rate and the damage rate of raw soybean: when the damage rate is high, then the refining rate is low. This is important because U.S. Soy’s ability to deliver soybeans with lower damage rates means customers can experience higher refining rates and yields.
Refining Yield of Different Sources of Soybean Oil
Fan Yang’s study shows that the refining yield of crude soybean oil from different sources is different. This is mainly due to different acid values of crude oil, followed by color and phosphorus content. Fresh crude soybean oil refers to the crude oil prepared by fresh soybean. Long-term storage crude soybean oil refers to the oil purchased from a country and stored for a period of time in China.
Evaluating the Cost to Refine
Overall, when comparing the variable cost of different soybean oil refining, U.S. Soy witnessed lower refining costs. In his study, Fan Yang compared estimated processing costs of soybeans from the United States, Brazil, and Argentina. Additionally, he analyzed total inputs and the variable cost of soybean oil from the three countries.
This research found that it costs less to refine U.S. soybean oil, making it a more efficient raw material. Using the Chinese yuan, soybean oil from the Pacific North West cost less when refining a metric tonne (44.05) compared to the South American countries. Long-term storage U.S. crude soybean oil was also lower in cost (60.85 yuan MT) in comparison to long-term storage crude soybean oil from the other countries.
Refining Costs Differentiated by Origin
Fan Yang’s research shows variability in the cost of refining different sources of soybean oil. U.S. soybean oil is relatively light in color and low in clay consumption, which leads to a lower variable cost of refining.
A U.S. Soybean Export Council (USSEC) contractor also analyzed Fan Yang’s numbers. They found for crushers and refiners, when comparing estimates for the variable cost and the lost oil value (RMB/mt), crude U.S. soybean overall is more valuable. U.S. soybean oil loses less oil when refining, which means refiners will have fewer input costs associated with refining.
The “lost oil value” numbers below are based on an oil value of 6000 RMB/mt.
- Lost oil value (RMB/mt) – 176
- Variable cost (RMB/mt) – 55.5
- Lost oil value (RMB/mt) – 140
- Variable cost (RMB/mt) – 45.1
- Gulf U.S.
- Lost oil value (RMB/mt) – 111
- Variable cost (RMB/mt) – 53.3
- PNW U.S.
- Lost oil value (RMB/mt) – 107
- Variable cost (RMB/mt) – 44.1
The same USSEC contractor also found for crushers, when comparing the NOL multiplier and typical vendor less guarantee, U.S. soybean oil has the advantage with lower loss numbers. This is important for crushers because the higher the loss, the greater the chance you are hit with contract penalties with refiners. The average actual loss numbers from highest to lowest between the countries are:
- Brazil: 2.95%
- Argentina: 2.34%
- Gulf U.S. : 1.87%
- PNW U.S.: 1.80%
U.S. soybeans are also lower in NOL and free fatty acid, meaning the refining rate of U.S. soybean oil is higher, and the variable cost associated with refining (bleaching clay, alkali, etc.) is lower. Furthermore, due to U.S. Soy’s low heat damage rate, the crude oil is relatively light in color, easy to decolorize and requires less clay.
Research shows U.S. Soy ranks No. 1 on the merits of consistency and ability to produce high-quality oil. In fact, the finished soybean oil from U.S. Soy offers increased fry stability, making it a good fit for highly demanding oil brands.
Dare to Compare: U.S. Soy a Gold Standard
High quality U.S. soybean oil is attributable to a combination of factors, including climate, growing conditions, soil types, post-harvest storage, and logistics. This research provides further proof that when U.S. and South American beans are processed alongside each other, U.S. soybeans produce a higher quality oil that can be processed at the lowest cost.
U.S. soybean farmers work to ensure quality soy that is later turned by crushers into high-quality meal and oil. Maintaining the integrity of that crop doesn’t stop at harvest. This continues with proper storage and handling, from the farmer’s storage bin to the export elevator. U.S. soybean farmers are continually improving their ability to deliver plenty of soybeans, grown sustainably, to big markets around the world.
We dare you to compare the advantages of using U.S. Soy now and in the future. Year after year, harvest after harvest, U.S. Soy delivers proven, consistent quality, reliability and value to earn its role as a trusted partner around the globe.
Looking Ahead: Soybean Oil Valuation Tool
Mr. Fan Yang’s findings have created a launch pad for other research into the impact of origin. In fact, Todd Doehring of Centrec Consulting Group, LLC has introduced plans for a research project focusing on the value of processing U.S. soybean oil compared to that of South American origins.
“It has been observed and noted that international refiners have a decreased cost of processing soybean oil produced from the United States versus soybean oil produced from South American origins, specifically Brazil and Argentina,” Todd Doehring says. “A survey and an economic study are essential to raise the bar from anecdotal evidence to actual benefits of U.S. soybean oil.”
This study aims to quantify the cost differences in refining oil from various origins by identifying oil characteristics that contribute to these variances. Richard Galloway of Galloway & Associates, LLC says they expect to see results complementary of Fan Yang’s findings.
“Our primary expectations are that we’ll find higher neutral oil loss due to higher free fatty acids experienced in South American soybean oil,” Galloway says. “Also, an increased use of bleaching medium due to the higher color of South American crude soybean oil. Given the assumptions about a specific refiner’s cost structure, these general differences in quality can be used to value these differences for a specific refiner.”
The group plans to use refiners’ expense structures to utilize the findings of their research to develop a type of calculator that allows for specific cost comparisons.
Based on the information collected from this survey on these intrinsic quality factors, the group will use that information to build a model that will then allow them to compare the refining cost differences between two different origins of soybean oil. Eventually, they will create a soybean oil valuation tool to estimate the economic costs of refining U.S. soybean oil versus refining South American soybean oil.
The tool will allow for data input, enabling individualized cost comparisons. The calculator takes research in this area a step further and it represents a tangible outcome of this important research into the impact of origin on soybean oil quality.
The group is currently collecting soybean oils and will complete an analysis of refining cost differences in March 2021.