Soybean Prices Spike Biodiesel Growth

John Davis

The latest monthly crop report from the USDA says the rapid rise in soybean prices, brought on by the rapid rise in the biodiesel industry, is keeping biodiesel from being as profitable as it could be.

This story on says the price for the biodiesel feedstock just rose above the profitability level:

Industry experts say biodiesel plants make a profit if soybean oil prices are 34 cents per pound or less.

On Monday, soybean oil for July delivery was trading at nearly 35 1/2 cents per pound on the Chicago Board of Trade. The market was anticipating prices to rise, said Fred Seamon, a Board of Trade agriculture analyst.

Soybean oil for December 2008 delivery was trading at just under 38 cents a pound, he said.

The article goes on to say while this won’t kill the biodiesel industry, it certainly won’t help. Even while other oil stocks (such as animal fats) can be used, soybean oil is used as the benchmark for pricing.