The American Soybean Association, in its weekly report, hailed the Senate approval of a Biodiesel Tax Credit Extension.

  

The Senate, on a vote of 93-2, last week passed the Renewable Energy and Job Creation Act of 2008. The bill extends for one year the biodiesel tax credit worth US$18 billion that was set to expire on December 31, 2008. The bill now goes to the House of Representatives.

 

"The American Soy Association greatly appreciates the work of the Senate to extend the biodiesel tax credit," said ASA President John Hoffman. "Passage of this legislation to extend the biodiesel tax credit enhances the viability of the U.S. biodiesel industry, which is an important market for US soy farmers.

 

Included in the bill is denial of the tax credit to fuel produced outside the US for consumption in another country. This would stop foreign countries from importing fuel, claiming the tax credit and shipping to another country.

 

Tyson's plan with oil giant ConocoPhillips to convert fats from meat leftovers into biodiesel was also absent. Tyson said earlier that the project would not be viable without the US$1 tax credit.

 

The legislation enacts a US$1 per gallon credit for biodiesel production, but the "renewable diesel" made from waste fat, or tallow, would only be eligible for a 50 cent per gallon credit..

 

Apparently, the major opposition to the Tyson-ConocoPhillips provision was from soap and detergent makers who depend on the tallow to make their products.

 

Other arguments came from biodiesel producers who say that the purpose of the credit was to help develop biodiesel projects that face significant start-up costs - costs which they say Tyson and ConocoPhillips do not have : Tyson would use one of ConocoPhilips' existing plants to carry out biodiesel production.

 

Slow growth in biodiesel production in EU
  

Meanwhile, growth in biodiesel production in the European Community is set to slow significantly in 2008 due to the competitively priced imports of the fuel, mainly as soyoil methyl ester (SME) B-99.9 from the US and Argentina, the report said. 

 

SME B-99.9 is biodiesel mainly manufactured in the US and in South America, and blended in the US with a minimal percentage of conventional diesel. After mixing, it qualifies for a US$1 per gallon federal tax credit.

 

The EU's estimated SME B-99.9 arrivals in 2007 were around 1 million tonnes, up from 90,000 tonnes in the previous calendar year. In both the US and Argentina, the industry mainly serves the export market.

 

Demand for imported biodiesel is expected to grow in the next few years as a result of policies in individual EU states and EU targets for an alternative fuels market share of 10 percent to be achieved by 2020.

 

Sharp drop in soy crush 
  

The Census Bureau confirmed the sharp drop in the crush previous reported by NOPA with the August crush pegged at 3.5 million tonnes, which were 479,000 tonnes below the previous year, a 13.7 percent drop.

 

Despite the low crush, soymeal stocks were large at 375,000 tonnes because August ended on a Labor Day weekend, resulting in August domestic disappearance that was 17 percent below last year and 14 percent below the 5-year average.

 

While implied usage likely will rebound in September as soymeal stocks drop, the ongoing domestic disappearance of soymeal has been well below year-ago levels since May and has lagged the 5-year average since June.

 

Soy oil stocks at the end of August dropped to 1.17 million tonnes from 1.45 million tonnes the previous year. Soy oil domestic disappearance has held up better than soymeal even though biodiesel usage of soy oil has lagged last year in recent months.

 

The soy complex closed mostly lower on September 25 reflecting gains in the petroleum markets. Additional pressure on the soymeal market may have come from the large soymeal stocks reported by the Census Bureau for the end of August.