August 27, 2007

 

US soy prices rise as more being diverted to make biofuels

 

 

The drive to expand the biofuels industry is driving soy prices to near record levels.

 

Soy oil production being turned into fuel is expected to be 12 percent for the fiscal year ended Sept. 30, up from 8 percent last year.

 

Soy prices are expected to hit their second-highest average mark ever this year, and the highest since 1983, according to the USDA.

 

The rise in soy prices mirrors a similar boost in corn prices, also used for biofuels in the US. 

 

Production of biodiesel, a renewable alternative to diesel fuel, has increased more than 13-fold in the past three years.

 

Imperium Renewables, a biofuels firm, opened one of the nation's largest biodiesel plant recently, with production target of 100 million gallons a year. One reason for locating the plant on the coast is so that the company could use imports as well as US soy, the company said.

 

Last week, Louis Dreyfus announced it would build the largest biodiesel plant of the US in Claypool, Indiana. The plant would process 50 million bushels of soy annually and produce one million tonnes of soymeal each year.

 

Other big plants are in the pipeline.

 

Production is expected to be raised from 250 million gallons last year to an estimated 300 million this year, the National Biodiesel Board reports.

 

Renewable Energy Group, which bills itself as the nation's largest biofuel plant operator, runs six plants and has three more under construction.

 

Biodiesel made from soy can be burned pure or as a 20 percent blend in diesel fuel.

 

Soy prices are rising even though stockpiles of the oil derived from the beans are also at near-record levels, says Keith Menzie, an Agriculture Department economist.