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Economics of Biodiesel and the Impact on Commodities

Economics of Biodiesel and the Impact on Commodities. Allan Gray, Purdue University Center for Food and Agricultural Business. Some Basic Figures. Biodiesel used as fuel extender and lubricant 73% of Biodiesel made from Soybean Oil 1 bushel of SB = 1.49 gallons of biodiesel

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Economics of Biodiesel and the Impact on Commodities

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  1. Economics of Biodiesel and the Impact on Commodities Allan Gray, Purdue University Center for Food and Agricultural Business

  2. Some Basic Figures • Biodiesel used as fuel extender and lubricant • 73% of Biodiesel made from Soybean Oil • 1 bushel of SB = 1.49 gallons of biodiesel • 1 gallon of soyoil = 1 gallon of biodiesel • Soyoil = $1.50 to $2.10/gal. • 1 bushel of corn = 2.7 gallons of ethanol • $2/bu. = $0.74/gal. - $3/bu. = $1.11/gal. • Crude Oil • Oil $70/brl. = $1.67/gal. - $50/brl. = $1.19/gal.

  3. Some Basic Figures • Subsidies • $1.00/gal. for Biodiesel = $1.50 per bushel • $0.52/gal. for Corn = $1.40 per bushel • Co-Products • Biodiesel – Glycerine • 0.89 lbs. per gallon worth about $0.18/lb. and declining

  4. Annual Distillate Consumption

  5. U.S. Biodiesel Production

  6. Alternative Feedstocks

  7. Projected U.S. Soybean Oil Demand and Production Largest Production Year on Record

  8. Projected U.S. Soybean Demand and Production

  9. Forecasted Soybean Acres and Production Source: FAPRI, University of Missouri

  10. Projected Impact of Increased Biodiesel Demand on Soybeans Soybeans Soybean Oil Price Soybean Meal Stocks

  11. Potential New Feedstocks • Soybean Oil -- 56 gallons per acre • Canola Oil – 111 gallons per acre • Castor Oil – 141 gallons per acre • Others • Crambe, flax, mustard, sunflower, camelina

  12. Final Comments • Biodiesel industry is relatively young • Growth rate dictated by price of Oil/Diesel first and then soybean oil prices • Important part of National Energy Policy but, Not Likely More than 10% of total distillate fuels in future

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