Irwin: 2021 Devastating for Biodiesel Biodiesel Industry Bleeds Red in 2021 While Renewable Diesel Production Explodes

BioRefineries/Renewable Fuel Production, Business News/Analysis, Feedstocks, Field/Orchard/Plantation Crops/Residues, Funding/Financing/Investing, Illinois, Marketing/Market Forces and Sales, Opinions

February 18, 2022

Print This Article Share it With Friends

by Todd Neeley (DTN Progressive Farmer) Biodiesel producers using soybean oil as a feedstock had what one agriculture economist called a “devastating year” in 2021, as the unprecedented high cost of soybean oil far outweighed all-time-high biodiesel prices of $6.42 a gallon.

In a new profitability analysis of the industry released on Wednesday, Scott Irwin, Laurence J. Norton chair of agricultural marketing at the University of Illinois, said biodiesel producers using soybean oil spent most of 2021 in the red as growth in the renewable diesel industry exploded.

…

“There is no doubt that the devastating losses in 2021 severely damaged the attractiveness of biodiesel plants as an investment,” Irwin wrote.

The biomass-based diesel industry is undergoing a fundamental shift in the nature of its production, with the emergence of renewable diesel production.

Soybean oil accounted for about 63% of feedstocks used to produce biodiesel in the U.S. as of December 2020, according to the Energy Information Administration.

Despite soy-based biodiesel’s struggles, overall biomass-based diesel production grew to a record 3.2 billion gallons in 2021, according to Clean Fuels Alliance America.

…

Despite historically bad margins in 2021, Irwin said it is a mystery why more biodiesel plants have not closed.

“One possibility is that biodiesel producers had a source of revenue we did not account for in the analysis, such as COVID relief funds,” he said.

“The other possibility is that the industry grimly hung on through 2021 in the face of the onslaught from renewable diesel production, and it is only a matter of time before more biodiesel plants are forced to shut down.”

Biodiesel margins began to fall at the end of 2020, and losses were within a historical range for losses at the start of 2021.

“The bottom literally fell out starting in April as soybean oil prices raced far ahead of biodiesel prices,” Irwin wrote. READ MORE

2021 Was a Devastating Year for Biodiesel Production Profits (FarmDocDaily)

Comments are closed.

Advanced BioFuels USA