ADM Cuts Biodiesel Output as Industry Hit by Weak Margins

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February 26, 2015

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by Rod Nickel and Chris Prentice (Reuters) Archer Daniels Midland , one of the world’s top biofuels producers, has slowed North American biodiesel output, the latest sign the industry is battling uncertainty over U.S. renewable fuel policy while the oil rout curbs demand.

The Chicago-based agri business has “temporarily” shifted production at its Velva, North Dakota, oilseeds processing facility from biodiesel to other products and cut production at its other North American facilities, ADM spokeswoman Jackie Anderson said in an emailed statement.

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The move is a sign of the “strain” being felt across the industry after a year-long drop in biodiesel prices and oil’s second-worst rout in history, said Steve Nicholson, an analyst with Rabobank AgriFinance in St. Louis, Mo.

“There’s no question we’ll see idling of plants and we may see consolidation or people getting out altogether,” he said.

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Uncertainty over decade-old federal policy aimed at energy independence and cutting carbon emissions has added to the industry’s woes.

The U.S. Environmental Protection Agency, which implements the Renewable Fuels Standard program has not yet set biofuel blending requirements for last year, 2015, and 2016.

A $1-per-gallon tax credit expired in December. READ MORE

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