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Callao, Missouri | It is necessary to pay attention. Which plant meeting did you go to?
My figuring, using some of dloc's numbers:
45bu x 60lb/bu x .18 oil yeild= 486lb of oil.
Oil currently sells for about .25/lb, doesn't it? 486x.25= $121.5 in oil per acre.
Using a conversion of oil to bio-diesel of 80% (I am not sure what the real conversion is), that is (486x.80), divided by 7.5lb/gallon (not sure on this one either) to yield 51.84 gallons of biodiesel, at a cost of $121.5/51.84 gallons= $2.34/ gallon BEFORE even taking into account expenses incurred during the refining process!!!!
So biodiesel made from soybeans is not that great of a deal. It's not a matter of adding value, because the oil already has considerable value (25 cents a POUND!). Biodiesel from SOYBEANS will not be cost-competitive under the following scenario's:
Lower oil price (Sub $50 oil)
Higher soybean/soybean oil price
Removal of Government Credit
New product release by petroleum companies as lubricity additives (because Ultra Low sulfer diesel currently needs a product like biodiesel to provide lubricity) at a lower cost than biodiesel.
Before you think that I'm just a critic, I should make it known that my family has considerable investments in biodiesel. I, personally have invested in Cargill's Paseo Biodiesel plant, which will be located next to their crush plant in Kansas City. In reading the perspectus, it is clear to see that the farmers role in partnering with Cargill is mainly three crucial elements:
1. They will take 1/2 the oil produced from the plant....Wooohooo! 1/2 of their market is literally next door to them. How would you like to feed cattle with your packer a stone's throw away?!?
2. The farmer component is building a large portion of the plant...ie, a large portion of demand.
3. Because it is farmer/New Generation owned, it qualifies for some additional breaks from Missouri Government.....There's that government interference on the free market rearing it's ugly head again!
Scott
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Soy Diesel Profitability
