US biodiesel firm fights high soy prices by changing feedstock

19 May 2011 23:25  [Source: ICIS news]

HOUSTON (ICIS)--US-based FutureFuel fought rising soybean prices by switching to lower-cost feedstocks, the company's chief executive said on Thursday at the Specialty Chemical Exchange Conference in Houston.

FutureFuel's biodiesel plant in Batesville, Arkansas, can produce 59m gal/year (233m litres/year).

The line was designed to run on feedstock with low levels of free fatty acids such as soybean oil.

However, prices for soybean oil have since risen substantially, said Lee Mikles, chief executive of FutureFuel, a specialty chemical and biodiesel producer.

"Soy has really been non-competitive for us," he said 

As a result, FutureFuel redesigned its line to handle feedstock with high levels of fatty acids, such as chicken fat, pork fat and yellow grease, Mikles said.

The feedstock switch, however, does not address the larger challenges facing the US biodiesel industry.

A biodiesel tax credit is set to expire at the end of this year. When the tax credit last expired, the US government took several months to restore it.

As a result, many US biodiesel plants shut down production because they could not operate profitably without the credit.

On the other hand, blending mandates could help support demand for biodiesel, Mikles added.

The conference was hosted by Informex.

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By: Al Greenwood
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