You are correct that in the current equilibrium state it is sub-optimal. Prices are settled right now where a small number of hungry poor people are out-competed by the transportation market because they can't pay more than it can.
That is bad, I completely agree. But fixing that isn't what the policy is for, the policy is for preventing starvation during World War 3.
So you have to compare the suffering of people here and now against the potential suffering expected without the policy in place multiplied by the probability that WW3 occurs.
If there were total war again between major military powers I could see a brutal spasm of months of using conventional weapons followed by nuclear murder-suicide from whichever side is losing worst. Perhaps a negotiated peace if the winning side doesn't make the losing believe it has nothing left to lose. I don't see it going on for years either way. Preparing to fight the next World War as if it were going to be as protracted as the last one is strange.
edit (too deep to reply): I really don't think it's moving the goal posts, you asked about redirecting that food production in general, not soy. As is mentioned elsewhere, the soy oil isn't really used much for food anyway.
That said - you can't just swap corn grown for ethanol for "corn for people to eat" - the equipment involved to harvest it is completely different, as are the facilities to process it. The same concerns apply to other crops.
Farmers currently produce as much food as the market demands, plus some excess capacity is converted biofuels. If the market required less, they would (eventually) produce less unsubsidized food. Then, the logic goes, WW3 takes out a lot of our food and we suffer massive shortages because there is no extra capacity to produce more.
Some amount of ethanol added to gasoline serves as a fuel oxygenator, reducing emissions of soot and carbon monoxide. A discussion of whether there is a better oxygenate than corn ethanol could be interesting, but 5% or 10% ethanol is really there for emissions, not biofuel.
You also can't give away your overproduction to less well off countries, as you cripple their ag market, preventing them from bootstrapping their own economy.
It's a moot point with transportation electrifying as quickly as it is. I don't have enough knowledge to say what crops we should be planting above and beyond what meets human consumption needs, but I can say without a doubt we should not be subsidizing crop based biofuels (only algae based fuels, only to be used for air and marine transport).