U of I Weekly Outlook: Bio-Diesel Production Growth

Source: Darrel Good (217) 333-4716

URBANA - U.S. energy policy is heavily influencing the rate of growth in bio-diesel production and the related consumption of soybean oil, said a University of Illinois Extension marketing specialist.

"Even though bio-diesel production continues to grow, profit margins are narrow and production would not be profitable at all without the current large subsidies," said Darrel Good.

Much of the strength in soybean prices since the fall of 2006 has been provided by soybean oil prices, even though U.S. soybean stocks have been record large. The strength in soybean oil prices has been associated with rising world bio-diesel production."

Good noted that the cash price of soybeans in central Illinois averaged $7.82 during August 2007. That price is 42 percent higher than the average during September 2006 when a record U.S. crop was being harvested. The average price of soybean oil and soybean meal at central Illinois processing plants increased by 48 percent and 28 percent, respectively, over that same period.

ACES News, Sept. 4, 2007