Friday, March 28, 2008 9:46 AM CDT
GLENVILLE — Renewable Energy Group announced this week that it is withdrawing its initial $150 million public offering because of commodity prices and adverse market conditions, which is temporarily ceasing production at SoyMor Biodiesel.
“We’re at all-time highs right now — on gold, crude oil, you name the commodity,” said Gary Pestorious, chairman of the SoyMor Board of Governors.
SoyMor announced March 14 it is suspending production of biodiesel. The plant’s 30 employees are on unemployment, Pestorious said. The board hopes to reopen the biodiesel refinery when conditions improve.
REG, based in Ames, Iowa, makes and sells a quarter of all biodiesel sold in the United States and only manages SoyMor. There are 56 owners of the Soymor limited liability company. Pestorious said REG is a large company that was going public in biodiesel but, like with SoyMor, the market makes it a tough time for prices, and it decided to wait. This decision doesn’t affect the Glenville plant, he said.
It seems the biodiesel industry is in a holding pattern, said Pestorious, while prices are making a large swing. Prices aren’t changing at 2 cents a day but changing an entire limit up or a limit down. Once the market gets comfortable with this year’s crop then maybe it will settle down, he said.
Soybean oil prices — one of the causes Pestorious noted for the halt in production at SoyMor — went down for a few days and then came back up for a few days during the past week. Prices jumped in 2007, going from 28 cents to 45 cents a pound. The Chicago Board of Trade Thursday has May’s soybean oil price at nearly 58 cents per pound.
“We’re kind of back to where we were,” Pestorious said.
Soybean oil makes up to 80 percent of operating costs for biodiesel plants, according to the U.S. Department of Agriculture.
In addition to high soybean oil prices, Pestorious said, the cost of diesel fuel and the weakened U.S. dollar contributed to the fact that SoyMor ran fewer than 15 days a month during the past four months.
Many biodiesel plants across the country have stopped production or slowed in recent months.
“Soybean oil is a big factor but it’s not the only factor,” Pestorious said. “It’s a combination of a bunch of factors that will determine when and if we start back up again.”
Pestorious said the plant will only shut down if the market stays where it is.
The Board of Governors, he said, will not fire up the plant again until it is comfortable with the economics. The board wants the market to even out before thinking about production again.
“Right now we’re at a high spike so it doesn’t work. But we also don’t think it will stay there,” Pestorious said.
“We think the market will adjust in time, and when it does and the economics work we’re back in business,” he continued. “We’ll start up again.”
The longtime record for soybean oil was 45 cents a pound in 1974, but that was shattered in 2007.
just wait, they will be crying to the politicians for more welfare money. GREEDY FREE_LOADING FARMERS!!