May 2004Un8ited Soybean Board 1 New Value-Added Products from Soybeans Opportunities for North...

May 2004 Un8ited Soybean Board1

New Value-Added Products from Soybeans

Opportunities for North American Soybeans

May 2004 Un8ited Soybean Board2

“The stone age did not end because we ran out of stones.” -Unknown

September 15 2006 Omni Tech International 3

1996 Anything you can make out of petroleum, you can make out of soybeans…

except money2006

Well maybe…

World Soy Production 1990100.5 Million Metric Tons

Brazil15%

Argentina11%

Other25%

World Soy Production 2005 217 Million Metric Tons

Canada1.4%

Brazil24.4%

Argentina18.0%China

India2.8%

Paraguay1.8%

US39.4%

Other4.0%

North American Production & Utilization2005 Marketing Year Whole Soybean production 3.5 Billion

Bushels Soybean crush 2 billion bushels Soybean Exports 0.9 billion bushels Carryover and other 0.6 billion bushels

What is in a Soybean?

40% Cellulosics and

Sugars

40% protein

20% Oil

North American Soy Crushing

NA crushes 1.8-2 billion bushels or 54-60 million tons

20-22 billion lbs of oil or about 2.8 billion gallons (10.6 billion liters.)

43-48 million tons of soybean meal.

What About Value Old value ratios (typical)

If whole beans were worth X, then oil was worth 2.0-2.2 X and meal is worth 0.9-1.0X. Example if beans are worth $6/bu ($0.10/lb) then oil is worth $0.22/lb and meal is worth $180/ton ($0.09/lb)

Oil value= $2.42 (35%) Meal value= $4.41 (65%) Return to crusher= $6.83/bu Meal set demand, but oil made the margin.

What About Value

Recent value ratios (Summer 2006) If whole beans are worth X, then oil is worth 2.6-

2.8 X and meal is worth 0.8 X. Example if beans are worth $5.40/bu ($0.09/lb) then oil is worth $0.26/lb and meal is worth $150/ton ($0.075/lb)

Oil value= $2.86 (44%) Meal value= $3.68 (56%) Return to crusher= $6.54/bu Oil is now determining value and driving demand

NA Soybean Oil Consumption

USE 1995 2005

Food 95% 88%

Feed ~2% ~2%

Industrial 3% 10%

Soybean Oil Demand Drivers

Food demand flat to down, due to lost share (corn, canola), transfatty acid issue.

Feed use is incidental, up slightly with increased crush.

Industrial use is small compared to food use, but increasing rapidly due to biodiesel, plastics and other industrial uses.

Soybean Meal Consumption

USE 1995 2005

Food ~ 4% >8%

Feed 95% 90%

Industrial <1% ~ 2%

Soybean Meal Demand Drivers Food demand is increasing significantly

due to soy dairy substitutes and concentrated proteins, still relatively small compared to feed.

Feed use is flat with increased crush. Industrial use (coatings, adhesives) is

increasing but remains very small percentage of total.

New Industrial Uses

Biodiesel Plastics Lubricants Paints, Coatings & Inks Solvents Adhesives

Price Changes – 1990 thru 200512/1/05- Soy Oil 21¢/lb. Crude $58.42/barrel Gas $13.03/MMBTU6/16/06- Soy Oil 24.9¢/lb. Crude $70.20/barrel Gas $7.46/MMBTU

Soybean Oil $/ 100 lbs Crude Petroleum $/ barrelNatural Gas $/ 10 MMBTU

Biodiesel

Tax incentives and mandates in the US should drive biodiesel production to 240 million gallons (912 million liters) in 2006

Up 320% from 2005 Equal to almost 9% of NA soybean oil

production.

Biodiesel EconomicsPer gallon

Feedstock cost @$0.27/lb= $2.025Other production 0.400Plant gate $2.425Less federal incentives -1.100Before freight $1.325Local spot petrodiesel* 2.055Gross margin $0.730

*Energy Management Institute 5/17/06 Memphis TN

PLASTICS/PLASTIC COMPOSITES

Market segmentsCurrent Polyols for Polyurethane foams, films,

molded parts Plastic CompositesEmerging Thermoplastics

North American Polyurethane Demand (millions lbs.)*

2000A 2002 2004*

PUR 6482 6393 6888

Polyol 3007 2956 3610

*2004 API End Use Survey

Polyols & Intermediate Prices

2001 – December, 2005 Cents per Pound

2001 2002 2003 2004 2005

Soybean Oil Flex poyol Rigid PolyolPropylene Propylene Glycol Propylene Oxide

Soy Polyols

At least five different chemical modification approaches

Range of costs and uses Molded foam Slab foam Carpet backing RIM and SMC parts

UTT Carpet Mill- Dalton GA

Flexible Foam Seating

Cargill supplying Woodbridge in Ontario for use by Ford

Target Area:

PLASTIC COMPOSITES

Soy-based thermoset resin Polyester resin with fiberglass filler Use by Ag Equipment manufacturers Testing by auto makers

Polyurethanes Testing pultrusion of parts Testing molding techniques and different fillers

Polyester Intermediate Prices 2001 – December, 2005 Cents per Pound

2001 2002 2003 2004 2005

Soybean Oil Benzene EthyleneMaleic Anhydride Propylene Glycol

LubricantsSoy Oil versus Petroleum BasestocksSoy Oil Advantages Better lubricity Lower volatility Better viscosity indexSoy Oil Disadvantages Poor oxidative stability Poor low temperature properties

Lubricant Basestock Prices 2001 thru October, 2005 Cents per Pound

101520253035404550

2001 2002 2003 2004 2005

Soybean Oil Group I Group I IGroup I I+ Group I I I

LUBRICANTS &HYDRAULIC FLUIDS Current Total loss applications 2-cycle engine oil Some hydraulic fluids Transformer fluids Metal working Mold release and other

industrial

LUBRICANTS &HYDRAULIC FLUIDS Researching Crankcase oil development at

Valvoline Hydraulic fluid formulation at Afton

(Ethyl Corporation)

Paints, Coatings & Inks

Traditionally largest industrial market for soybean oil.

Alkyd resins declining with decline of oil based paint.

Soy ink growing as price is more competitive.

Paints, Coatings & Inks

Research Water based (latex) paints Powder coatings UV cured inks.

Latex Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound

2001 2002 2003 2004 2005

Soybean oil Vinyl Acetate Acrylic Acid

Powder Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound

2001 2002 2003 2004 2005

Soybean oil Maleic Anhydride Propylene GlycolStyrene Propylene

Solvents

Primarily Soy methyl esters Same as biodiesel with slightly different

standard. New compounds in development.

Solvent Prices 2001 thru October, 2005 Cents per Pound

020406080

100120140160180200

2001 2002 2003 2004 2005

Methyl Soyate MEK TCEMineral Spirits Methanol d'Limonene

SOLVENT MARKET APPLICATIONSCOMMERCIAL Parts cleaners &

degreasers Hard surface cleaners Stainless steel

equipment cleaners (Restaurants)

Printing ink cleaners Paint strippers Adhesives removers Mastic removers Graffiti removers Asphalt cleaners &

release agents Concrete & wood stains

Hand cleaners Hand lotions Oil spill remediation Corrosion protectants Oil field equipment

cleaners Plant floor cleaners

APPLICATIONS IN DEVELOPMENT

SME: Plastic waste disposal &

reuse Highway paving &

patching materials Pesticide carriers

(mosquito larvicides) Mold & mildewcides Paper pulp recycling Alkyd coating carriers Stationary engine fuels

(hydrogen)

Soy Oil: Bioremediation (soil &

groundwater) Metalworking fluids Emollients (personal

care products)

ADHESIVES

Primary market: Wood Adhesives

Based on soy flour or protein concentrates

Recently launched new use in interior grade plywood

Limited packaging adhesives based on soybean oil.

Adhesives Intermediate Prices 2001 – December, 2005 Cents per Pound

2001 2002 2003 2004 2005

Soybean Meal Urea Phenol Formaldehyde

ADHESIVES

Research Improve water resistance to allow

exterior plywood use Lower viscosity to allow use

in oriented strandboard

Fermentation Research

Produce ethanol from carbohydrates in soybean meal

Real goal is a lower cost protein concentrate 70% protein No indigestible sugars/anti-nutritionals Improved storage properties.

Thank You

Any Questions?

www.omnitechintl.com

May 2004Un8ited Soybean Board 1 New Value-Added Products from Soybeans Opportunities for North...

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