U.S. agricultural cooperatives are building new soybean crushing plants at the fastest rate in two decades as farmers in the world's top producer prepare to sow another record area with soy.
The growth worldwide in the number of consumers with income to spend on pork and chicken has led to a rapid rise in demand for food to raise animals. Crushing plants produce high-protein soymeal feed for livestock and soyoil for food and fuel.
U.S. processors are expected to open plants with capacity to process at least 120 million bushels of soybeans in 2019, up around 5 percent from existing capacity of an estimated 1.9 billion bushels.
Strong demand for feed has boosted crushing margins, the measure of profitability for the plants. Margins stand at more than a $1 per bushel, the strongest for 18 months, according to the CME Group.
Growth in feed demand means crushing capacity worldwide will need to expand further.
Global soy production would have to increase by 20 percent over the next decade to keep up with feed consumption according to Tom Hammer, president of industry group National Oilseed Processing Association.
U.S. soy plantings totaled a record 90.2 million acres this year and the USDA in a preliminary forecast set plantings next year at 91.0 million acres.
And while industry capacity could reach 2 billion bushels in under two years, the USDA said crushings likely will not reach that level until 2020-21.
Earlier this year Perdue Farms opened a processor with capacity for 17.5 million bushels in Pennsylvania, that state's first large-scale soy crushing plant.
Many of the new facilities are in places outside the central U.S. Midwest soy belt, taking advantage of increased supplies from farmers in those areas that have switched to soybeans from less profitable crops such as wheat.
