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Highlights

Strong soybean oil demand to continue into 2022

Chevron JV adds built in soybean oil demand

Bunge, the world's largest oilseed producer, has reported stronger-than-expected Q3 results as demand for soybean oil feedstocks to make renewable diesel grows amid refiners and biofuel companies seeking to make cleaner fuels.

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Operating performance from Bunge's refined and specialty oil segment were driven by a better-than-expected market environment, said CEO Gregory Heckman on the Oct. 27 results call.

"Results in refined and specialty oils improved in all regions, with particular strength in North America, driven by strong demand from food service and renewable diesel," Heckman said.

Despite a decrease in sales volumes to 2.39 million mt in Q3 2021 compared with Q3 2020 sales of 2.48 million mt, revenues from the refined and rose to $3.65 billion in Q3 2021, compared with the $2.43 billion in Q3 2020.

The rise is due mainly to higher soybean oil prices which almost doubled year on year with Q3 2021 soybean prices averaging 65.04 cents/lb, compared with 33.37 cents/lb in Q3 2020.

Heckman said he expected the strong Q3 demand for oils to continue into 2022, based on demand for refined soybean oil which is highly desirable and in demand as a feedstock to make RD and sustainable aviation fuel.

Chevron JV adds built-in demand

Bunge is well-positioned to take advantage of meeting increased demand in soybean oil used to make renewable fuels. In September, Bunge signed a joint venture with Chevron that will increase their output of feedstocks by nearly doubling the capacity of two of its soy crushing facilities.

California is the destination for RD and SAF, due to the additional credits offered for consumption under the Low Carbon Fuel Standard credit,in addition to the federal blenders tax credit and RINs credits under the Environmental Protection Agency's Renewable fuel standard.

California RD consumption hit a record high in Q1 2021, reaching almost 200 million gallons, according to S&P Global Platts Analytics data.

Platts Analytics expects total US RD production to reach over 4 billion gallons by 2025, up from the 538 million gallons produced in 2020.

"This partnership will establish a reliable supply from farmer to Chevron's downstream production an distribution to the in-fuel consumer," Heckman said.

Under the deal, Chevron will invest $600 million in a joint venture with Bunge to expand soybean processing capabilities at Bunge plants in Illinois and Louisiana to increase their ability to make renewable feedstock output.

Chevron has set as goals to produce 100,000 b/d of RD and SAF from its El Segundo, California, refinery by 2030, having recently produced its first batch of SAF at the plant. Bunge currently supplies soybean oil to the refinery.

Plans are in the works to convert a diesel hydrotreater currently used to co-process hydrocarbons and renewables to a full renewable capacity in 2022, adding 10,000 b/d to current renewable capacity.