Alternative fuel sources, such as biodiesel and ethanol, continue to draw attention from consumers and lawmakers, pushing the renewable fuels industry towards what some call a biofuel revolution. The growth of biodiesel - which can be made from soybean oil - leads some analysts to predict that soyoil will drive soy futures in 2007.
"Assuming crude oil stays above $50.00 a barrel, soyoil has the potential to become he stalwart of the soy complex with meal a depressant on the crush amid increased competition from distillers dried grains," says Dan Basse, president of Chicago-based AgResource Company, in a Dow Jones release.
The usual soybean crush produces four times more soymeal than soyoil, but analysts suggest that if the crush's purpose was shifted to produce soyoil, it could build soymeal stocks and lead to lower prices.
The market must also keep an eye on how many acres are taken away from soybeans in 2007, when corn prices are expected to be high. If a significant amount of acres are taken away from soybeans, it could result in a big bull market into 2007-08 marketing year.