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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…
September 15 2006 Omni Tech International 4
World Soy Production 1990100.5 Million Metric Tons
US49%
Brazil15%
Argentina11%
Other25%
September 15 2006 Omni Tech International 5
World Soy Production 2005 217 Million Metric Tons
Canada1.4%
Brazil24.4%
Argentina18.0%China
8.3%
India2.8%
Paraguay1.8%
US39.4%
Other4.0%
September 15 2006 Omni Tech International 6
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
September 15 2006 Omni Tech International 7
What is in a Soybean?
40% Cellulosics and
Sugars
40% protein
20% Oil
September 15 2006 Omni Tech International 8
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.
September 15 2006 Omni Tech International 9
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.
September 15 2006 Omni Tech International 10
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
September 15 2006 Omni Tech International 11
NA Soybean Oil Consumption
USE 1995 2005
Food 95% 88%
Feed ~2% ~2%
Industrial 3% 10%
September 15 2006 Omni Tech International 12
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.
September 15 2006 Omni Tech International 13
Soybean Meal Consumption
USE 1995 2005
Food ~ 4% >8%
Feed 95% 90%
Industrial <1% ~ 2%
September 15 2006 Omni Tech International 14
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.
September 15 2006 Omni Tech International 15
New Industrial Uses
Biodiesel Plastics Lubricants Paints, Coatings & Inks Solvents Adhesives
September 15 2006 Omni Tech International 16
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
$0
$20
$40
$60
$80
$100
$120
$140
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Soybean Oil $/ 100 lbs Crude Petroleum $/ barrelNatural Gas $/ 10 MMBTU
September 15 2006 Omni Tech International 17
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.
September 15 2006 Omni Tech International 18
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
September 15 2006 Omni Tech International 19
PLASTICS/PLASTIC COMPOSITES
Market segmentsCurrent Polyols for Polyurethane foams, films,
molded parts Plastic CompositesEmerging Thermoplastics
September 15 2006 Omni Tech International 20
North American Polyurethane Demand (millions lbs.)*
2000A 2002 2004*
PUR 6482 6393 6888
Polyol 3007 2956 3610
*2004 API End Use Survey
September 15 2006 Omni Tech International 21
Polyols & Intermediate Prices
2001 – December, 2005 Cents per Pound
0
20
40
60
80
100
120
2001 2002 2003 2004 2005
Soybean Oil Flex poyol Rigid PolyolPropylene Propylene Glycol Propylene Oxide
September 15 2006 Omni Tech International 22
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
September 15 2006 Omni Tech International 23
Flexible Foam Seating
Cargill supplying Woodbridge in Ontario for use by Ford
September 15 2006 Omni Tech International 24
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
September 15 2006 Omni Tech International 25
Polyester Intermediate Prices 2001 – December, 2005 Cents per Pound
0
20
40
60
80
100
120
2001 2002 2003 2004 2005
Soybean Oil Benzene EthyleneMaleic Anhydride Propylene Glycol
September 15 2006 Omni Tech International 26
LubricantsSoy Oil versus Petroleum BasestocksSoy Oil Advantages Better lubricity Lower volatility Better viscosity indexSoy Oil Disadvantages Poor oxidative stability Poor low temperature properties
September 15 2006 Omni Tech International 27
Lubricant Basestock Prices 2001 thru October, 2005 Cents per Pound
05
101520253035404550
2001 2002 2003 2004 2005
Soybean Oil Group I Group I IGroup I I+ Group I I I
September 15 2006 Omni Tech International 28
LUBRICANTS &HYDRAULIC FLUIDS Current Total loss applications 2-cycle engine oil Some hydraulic fluids Transformer fluids Metal working Mold release and other
industrial
September 15 2006 Omni Tech International 29
LUBRICANTS &HYDRAULIC FLUIDS Researching Crankcase oil development at
Valvoline Hydraulic fluid formulation at Afton
(Ethyl Corporation)
September 15 2006 Omni Tech International 30
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.
September 15 2006 Omni Tech International 31
Paints, Coatings & Inks
Research Water based (latex) paints Powder coatings UV cured inks.
September 15 2006 Omni Tech International 32
Latex Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound
0
20
40
60
80
100
120
2001 2002 2003 2004 2005
Soybean oil Vinyl Acetate Acrylic Acid
September 15 2006 Omni Tech International 33
Powder Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound
0
20
40
60
80
100
120
140
2001 2002 2003 2004 2005
Soybean oil Maleic Anhydride Propylene GlycolStyrene Propylene
September 15 2006 Omni Tech International 34
Solvents
Primarily Soy methyl esters Same as biodiesel with slightly different
standard. New compounds in development.
September 15 2006 Omni Tech International 35
Solvent Prices 2001 thru October, 2005 Cents per Pound
020406080
100120140160180200
2001 2002 2003 2004 2005
Methyl Soyate MEK TCEMineral Spirits Methanol d'Limonene
September 15 2006 Omni Tech International 36
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
September 15 2006 Omni Tech International 37
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)
September 15 2006 Omni Tech International 38
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.
September 15 2006 Omni Tech International 39
Adhesives Intermediate Prices 2001 – December, 2005 Cents per Pound
0
10
20
30
40
50
60
70
2001 2002 2003 2004 2005
Soybean Meal Urea Phenol Formaldehyde
September 15 2006 Omni Tech International 40
ADHESIVES
Research Improve water resistance to allow
exterior plywood use Lower viscosity to allow use
in oriented strandboard
September 15 2006 Omni Tech International 41
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.
September 15 2006 Omni Tech International 42
Thank You
Any Questions?
www.omnitechintl.com