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By Robert Rapier on Jul 18, 2007 with no responses

Biodiesel Growth Slowing

From yesterday’s OPIS:

It has been a tough year for biodiesel markets as well as for biodiesel producers. Plants are struggling to break even against high feedstock costs including near-record high soy oil prices. That has made an issue of liquidity as many producers shut down for extended periods or run well below capacity. A number of new plant projects have also been taken off the table.

The result is biodiesel production will grow this year, but industry sources expect it will not see the fantastic growth rates of previous years. Some biodiesel sources expect that only about 300 million gal may end up being produced this year – that would still be up around 33% against last year but far less than capacity and still just a tiny fraction of conventional diesel output.

I expect to see similar trends for ethanol, as high corn prices and overbuilding of ethanol plants squeeze producers on both ends.