North Dakota Soybean Processors Plant Continues Planning

Organizers of the equity drive for the North Dakota Soybean Processors crushing plant planned for the Spiritwood Energy Park Association industrial park are pausing their efforts until the end of the month, according to Scott Austin, general manager of Minnesota Soybean Processors, the parent company of North Dakota Soybean Processors.

“We’re taking a bit of a hiatus because of the harvest,” he told the Jamestown/Stutsman Development Corp. Monday. “We’ve been working on other planning issues.”

Those planning issues have included work on the air quality permit from the North Dakota Department of Health and other permits needed for construction and operation of the plant.

Along with arranging financing for the plant, the company is working on forming strategic partnerships with companies in the soy oil industry, Austin said.

The planned soybean processing plant at Spiritwood has an estimated cost of $287 million. Minnesota Soybean Processors are investing $66 million, another $60 million is being sought from individual and institutional investors for the project, and the remaining $161 million will be financed with loans.

When completed, the plant will crush 42.5 million bushels of soybeans each year producing soy oil that can be used for biodiesel and soy meal used for livestock feed.

Austin said the project will still take 24 months from the time work starts until the end of construction. Work on the project could start as soon as the equity drive reaches its goal of $60 million.

The equity drive will continue in November when officials from North Dakota Soybean Processors return to this area to meet with potential investors.

In other business, the JSDC Board of Directors approved changes to the reports that must be filed by businesses receiving economic incentives. Corry Shevlin, JSDC business development manager, said the changes make the reports to the JSDC more consistent with reports the businesses must file with the Bank of North Dakota.

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Palm Recovery Weighs on Oilseed Price

The price of canola is determined by a host of factors.

The supply and demand of canola is a key determinant but so too the global supply and demand for other types of oilseeds, particularly soybeans and palm oil.

Currency fluctuations also work into the price. Canola prices are also affected by the markets for its processed products, meal and vegetable oil.

Given the fairly high level of oil in canola, developments in veg oil markets, such as palm oil production and biofuel policies, also play a role in pricing.

These two stories look at factors in the global veg oil market.

One of the world’s leading oil-seed analysts expects downward pressure on prices as world vegetable oil supply recovers in 2017-18.

In a Sept. 15 presentation at Globoil 2017 in Mumbai, India, Thomas Mielke, analyst with Oil World, said palm oil production is rising after a rough year in 2016.

Palm oil is a key driver of the world vegetable oil complex. Vegetable oil prices have a strong effect on canola because of its high oil content.

After falling sharply from last winter to this spring, palm prices have been climbing since July, but Mielke believes that is temporary.

Crude palm oil prices f.o.b. Indonesia were $727 per tonne as of Sept. 14, up $75 since early July.

Palm production through 2016 was hurt by a drought associated with the El Nino of 2015-16, and that led to low stocks.

“The global production deficit of palm oil as well as of all vegetable oils was unprecedented in calendar year 2016, which resulted in a steep decline in stocks in the 12 months ending December 2016,” Mielke wrote in the presentation.

World stocks of palm oil were down 3.6 million tonnes from a year earlier as of the beginning of 2017. With the end of the drought, palm production was expected to rise in 2017 and cause prices to fall. The market did drop into the spring. However production did not recover as quickly as expected and prices held on much better than expected and actually staged a rally in late summer.

Factors that helped support the rally include continued strong demand, poor coverage by buyers and indications that production in September and October will be lower than anticipated.

Mielke was surprised by the magnitude of the price increases in August and September, but the good times may be coming to an end.

“I expect some downward adjustment in the near to medium term,” said Mielke.

“I would not be surprised to see palm oil prices in Southeast Asia and Europe to drop by $30 to $50 U.S. (per tonne) from the level registered on Sept. 14.”

That is because palm oil pro-duction is expected to recover in 2017 to 66.1 million tonnes, up from 59 million tonnes during last year’s drought.

Oil World forecasts a record 69.7 million tonnes of production in 2018, leading to a surplus of the product.

“Stocks will recover more or less sharply, and this could result in some downward pressure in palm oil prices in 2018,” he said.

Soybeans are another major player in the vegetable oil complex.

Mielke said South American soybean stocks were 15 million tonnes higher than a year ago as of the beginning of September.

It is unusually dry in parts of Brazil and unusually wet in Argentina, which could result in a five to seven million tonne reduction in production when the crop comes off in South America in early 2018. However, the United States is harvesting a bumper crop that will increase its stocks by 12 to 15 million tonnes by the end of 2017-18.

Global soybean stocks are expected to be ample at 97 to 100 million tonnes, rivalling last year’s record carry-out.

World soybean crush will have to rise by 12 million tonnes in 2017-18 to compensate for insufficient supply of other vegetable oils and to replenish soy oil stocks.

The huge soybean stockpile is offsetting tightness in world supplies of rapeseed and canola, which will remain tight in 2017-18 with a global crop of 63 to 64 million tonnes.

Some wild card factors that could affect the vegetable oil complex are a labour shortage in Indonesia, the potential for worsening weather conditions in South America and imports from important markets such as India, China and Pakistan.

“China in particular has a big problem in its domestic vegetable oil balance, mainly in respect to the domestic tightness in rapeseed oil and palm oil,” Mielke said.

“Higher imports and crushings of soybean can only partly moderate the vegetable oil shor-tage in China. The country will have to sizably step up imports of palm oil and soy oil.”

Canadian Canola Crush Markets Remain Range-Bound

The chart at right shows the trend in a calculated canola crush margin index, which has remained range-bound since mid-July, ranging from $73.84/metric ton over the nearby future

 for the week of July 17 to a low of $51.46/mt over the nearby future for the week of Aug. 14. Today’s close was $59.47/mt, which is in the lower one-half of the range traded.

The calculation is largely based on the formula used by the Canadian Oilseeds Processors Association, which is described as follows:

Canola Board Crush Margin in CAD/metric tons = ((BO*22.04623* Noon Rate*.40) + (SM*1.103*Noon Rate*.6*.75)) – ICE Canola seed future

(Where: BO = soybean oil future, SM = soymeal future and Noon Rate = daily report from the Bank of Canada)

 Given that the Bank of Canada ended the daily reporting of the historical noon rate as of March 1 2017, it is assumed that COPA’s formula continues to rely on a daily exchange rate reported by the Bank of Canada. The CAD/USD rate is now just one of 26 currency pairs reported by the Central Bank that is based on an average trading level over the course of each business day. Instead, the index calculated on today’s chart is based on the closing spot Canadian dollar trade.

Since the recent high reached of $131.74/mt for the week of Jan. 9, the return has been challenged by weakness in soybean oil futures, soymeal futures along with a higher Canadian dollar trade. For example, the continuous soybean oil chart points to a drop of 6.7% from the close the week of Jan. 9 to today’s close, soybean has fallen by 7.7% while the Canadian dollar has increased by 5.2%, all three factors negatively affecting potential crush margins. One potential distortion to the formula is the contribution of oil that is pegged at 40%, while the Canadian Grain Commission’s Preliminary quality of western Canadian canola 2017 points to a mean oil content of 44.8% across all grades, although this represents early results and is far from final.

The current index calculated is just 52% of the level reported this time last year while also below the three-year average for this week at $90.86/mt. Despite this, the latest Canadian Oilseed Processors Association crush data as of Sept. 27 shows the weekly crush at 184,831 metric tons, up 8.9% from the previous week and 14.6% higher than the previous four-week moving average. Despite weaker crush margins, the cumulative crush is just 63,617 metric tons behind the record pace set in the 2016/17 crop year.

Producers continue to deliver seed at a record pace, with the most recent Week 8 data showing 2.9346 million metric tons delivered into the licensed handling system, including crushers, which is 7.6% or 206,500 metric tons ahead of the pace set last year as of Sept. 24 data.

ASA Welcomes Approval of Soybean Oil Heart Health Claim

The American Soybean Association (ASA) welcomed news on Aug. 1 that the U.S. Food and Drug Administration (FDA) has approved a qualified health claim linking consumption of soybean oil to reduced risk of coronary heart disease.

The petition, filed by Bunge North America, pointed to the potential heart health benefits of soybean oil, and manufacturers may now communicate that soybean oil may reduce coronary heart disease risk and lower LDL-cholesterol when replacing saturated fat and not increasing calories. ASA President Ron Moore, a farmer from Roseville, IL, applauded the news in a statement Monday.

“The cooking oil market is extremely important for U.S. soybean farmers, and the newly-approved health claim will enable manufacturers of soybean oil to communicate to consumers about the heart-healthy benefits of soybean oil. As we compete within the market against other cooking oils, having FDA recognize the ability of soybean oil to provide a superior omega-3 fatty acid profile while also lowering bad cholesterol levels is a benefit to consumers and to producers alike. Heart-healthy soybean oil creates a potential for growth in a time when net farm income is down. This development is a welcome one, and we congratulate the Bunge team for their work in seeing it to fruition.”

2017 IOMSA Convention Speaker Presentations

Click presentation titles to download corresponding PowerPoints from the 2017 IOMSA Convention, June 25-27, in Galveston, TX

Dust Control Equipment & Technology, NFPA 652/654  —  Rick Klaus, Osprey Corporation

Smart-Gear Technology & Applications  —  Mark Kendall, Siemens Corporation

OSHA Regulatory Compliance Update, Keeping a Step Ahead  —  James Shelton, OSHA

What Can OSHCON Do For You, How to Make it Happen  —  Glenn Abdelnoor, OSHCON

Multi-Generational Workforces  (not available)  —  Dr. Di Ann Sanchez, DAS HR Consulting

NFPA 36 Update  —  Rich Barton, N. Hunt Moore & Associates

Federal Policy Outlook  (not available)  —  David Hovermale, NOPA

Getting the Most Out of Your Consultants  —  Steve Lucy and Natalie Harvill, JQ Engineering

Professional Ethics  —  Michael Varner, Brown Sims

Registration is Open for the 2018 IOMSA Convention | March 25-27 | Denver, CO

The 2018 IOMSA Convention will be held March 25-27 at the Embassy Suites Downtown Denver, CO.

The convention will be co-located with the Grain Elevator and Processing Society’s (GEAPS) Exchange 2018. While the two events are separate, they are located in adjacent buildings and are running simultaneously.

IOMSA is in no way merging with GEAPS.

Co-location provides IOMSA Convention attendees the opportunity to attend the GEAPS Exchange Expo on Sunday, March 25. A special rate will be offered to IOMSA Convention attendees who would like to visit the GEAPS Exchange Expo.

For more information about GEAPS Exchange, go to www.geaps.com/exchange-expo.

For more information on the 2018 IOMSA Convention, look for future issues of Oil Mill Gazetteer and check www.iomsa.org regularly.

To register for the 2018 IOMSA Convention, click here!

Massive Reorganization of USDA Proposed

U.S. Secretary of Agriculture Sonny Perdue has submitted a plan for the first reorganization of the U.S. Department of Agriculture (USDA) since 1994. The proposal aims to reconfigure three of the USDA’s seven wings, which account for two-thirds of the USDA staff, though the initial report to Congress states that this will be done without a reduction in the department’s workforce.

Included in the just-released plan is the creation of the new position of undersecretary for trade that was called for in the 2014 Farm Bill. The creation of the new role would abolish the undersecretary for rural development and will oversee the Foreign Agriculture Service, which is currently overseen by the agriculture undersecretary for farm and foreign agricultural services.

The new undersecretary of trade will need to be confirmed by the Senate and would chair a committee of agencies responsible for the export and import of agricultural goods such as the Food Safety and Inspection Service, according to Agriculture.com.

“Our plan to establish an undersecretary for trade fits right in line with my goal to be American agriculture’s unapologetic advocate and chief salesman around the world. By working side by side with our U.S. Trade Representative and Secretary of Commerce Wilbur Ross, the USDA undersecretary for trade will ensure that American producers are well equipped to sell their products and feed the world,” Perdue said in a USDA statement.

Moving forward, the Foreign Agriculture Service would be tasked with focusing on marketing U.S. agricultural products rather than a dual purpose of marketing and food aid. This is something that the Progressive Farmer states would view as a positive move by development specialists who see the role of the U.S. government as training foreign farmers how to raise productivity rather than shipping U.S. products to distressed regions.

Other agencies to come under the umbrella of the new undersecretary include the Natural Resources Conservation Service (NRCS) and the Risk Management Agency (RMA), which navigates crop insurance issues and policy.  

The USDA states that the elimination of the undersecretary for rural development “will elevate rural development agencies to report directly to the secretary of agriculture to ensure that rural America always has a seat at the table.”

The plan also calls for the elimination of the undersecretary for natural resources and environment, according to the The Progressive Farmer, resulting in moving the Natural Resources and Conservation Service under control of the undersecretary for farm services. Additionally, the plan calls for making the U.S. Forest Service a stand-alone agency.

Additional shifts call for the reclassification of functions such as rural electricity, broadband, and energy development as offices, losing their undersecretary. However, USDA divisions in charge of public nutrition, food safety; research, education, and economics; agricultural marketing, and regulatory programs will remain as they are.

“The men and women of American agriculture are hardy people, many of whom were born into the calling of feeding America and the world,” said Perdue. “Their efforts are appreciated, and this adjustment to the USDA structure will help us help them in even better ways than before.”

AGP Breaks Ground on New Soybean Processing Facility in Aberdeen, SD

Ag Processing Inc (AGP) held a ground-breaking event today at the site of the company’s new soybean processing facility in Aberdeen, SD.

AGP Board members and management team hosted state and community leaders for the ceremony at the construction site today.

Originally announced in November 2015, the project will bring to Aberdeen and the surrounding area a state-of-the-art soybean processing facility, which will have a tremendously positive economic impact on the community and region.

Photo Gallery of Groundbreaking

“We are excited to break ground on AGP’s tenth soybean processing plant here today,” Keith Spackler, AGP CEO, noted during his remarks.

“This is an opportunity that we have been evaluating for some time, and we appreciate the strong working relationship with state and local economic officials who have been great partners in the process.

“AGP’s cooperative ownership base supports this opportunity to expand and enhance our value-added platform.”

He added that the new facility will begin processing soybeans in the fall of 2019 as originally planned.

“Certainly a construction project as significant as this one requires a good team, and our team is working with others to deliver on the construction phase of this project,” reported Cal Meyer, AGP’s COO.

“This facility will process over forty-five million bushels of soybeans annually, so it will have a very positive economic impact for farmers and communities in this region.

“In addition, the plant will provide the Aberdeen community with nearly fifty new jobs with competitive compensation and benefits.”

“AGP’s desire to build a soybean processing plant in Aberdeen was driven by several important factors, including a large supply of soybeans, a community that can provide for a great workforce, and solid infrastructure and transportation capabilities,” said Brad Davis, AGP’s Board Chairman.

“The relationships that have been formed with the community and our members will make this plant a successful one for many years to come.”

Cargill Joint Venture Opens $100 Million Oilseed Plant in Northern China

A joint venture formed between Cargill, and China’s New Hope Group and Hebei Bohai Investment Group has officially launched Hebei Jiahao Grain & Oil Co. Ltd – a new $100 million oilseed processing plant located in Northern China.
 

Located in the Bohai New Development Area – the largest economic development zone on China’s east coast, the 21,000 square-meter plant is expected to have annual processing capacity of 1.32 million tons that will help meet demand in the region for high quality food products, help enhance the development of the local economy, and further the integration of the Beijing-Tianjin-Hebei regions.
 

Concurrent with the announcement of the opening of the plant, a second announcement was made proclaiming the opening of Hebei Jihai Port Co Ltd (Jihai Port), which operates a bulk and general cargo birth with a capacity of 100,000 tons. This port will provide the transportation and storage requirements of the new plant for both domestic and overseas shipments.