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Rising soyoil off-take for biodiesel production is raising eyebrows within the industry, particularly with the economics of the market not showing justification for the rise. Data from the Census Bureau’s stocks report showing the second monthly increase in soyoil used in biodiesel consumption cropped up as the high cost of soyoil has left many biodiesel plants struggling to stay operational, industry analysts said. The Census Bureau reported soyoil used in methyl esters in February was 290.1 million pounds, rising 22 million over January. This marks the second monthly rise in biodiesel consumption, said Greg Wagner, analyst with AgResource Co. in Chicago.

Methyl esters is the chemical term for the conversion of soyoil or fats into biodiesel. The figure is the highest soyoil off-take of methyl ester in the last six months, with usage also dramatically higher than last year by a whopping 111.7 million pounds. The March stocks report is keenly anticipated, as analysts look to see if the uptrend in methyl esters usage continues, Wagner said. The industry has a historic tendency of not putting better than two months usage increases back to back, Wagner added. The U.S. Census Bureau is scheduled to release its March Fats and Oils: Production, Consumption, and Stocks reports May 1. “The industry can’t cash-flow biodiesel with soyoil at current prices,” said Michael Swanson, agricultural economist with Wells Fargo Bank in Minneapolis. With 60-cent-a-pound soyoil, and biodiesel priced on par with diesel fuel near $4.20 a gallon, it doesn’t provide a very good yielding operation, Swanson said. Rick Kment, biofuels analyst with DTN in Omaha, Neb., said a lot of biodiesel plants have cut back operations from where they were a year ago, “but the plants are still up and running, but producing at 25% to 40% capacity.” Despite the high costs of inputs, many plants remain open in an effort to keep fixed costs moving, and with long range outlooks for the industry to turn around, they want to be positioned where they can ramp up production to meet demand, Kment said. On average its takes between 7 and 8 pounds of soyoil to make one gallon of biodiesel. Soyoil prices fell sharply during March, dropping from a record high in the May future at 70.82 cents per pound to an intraday low of 49.18 cents by April 1. The collapse of soyoil values and a resurgent petroleum products market has worked to sharply retrace steeply unprofitable biodiesel margins, agricultural advisory/research firm AgResource Co. reported in a market note. “The losses which spiked at over 20 cents/BTU in late February appeared tantalizingly close to crossing the threshold into profitability,” AgResource said.

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