Soybean Rise Could Cost Biodiesel

Farmers are expected to plant more corn and less soybeans this year in hopes of cashing in on the growing demand for ethanol, according to the Daily Reckoning. This could lead to a doubling in soybean prices, which would also spike the prices of biodiesel.

A survey shows that despite increasing demand for biodiesel, the soybean crop for this year will be the smallest in more than a decade. That isn't good news for the many companies building biodiesel plants in places like Cairo, Illinois or Seabrook, Texas.

Some plant owners are looking to chicken fat as a cheaper alternative to soybeans as a biodiesel ingredient. According to the Detroit Free Press a new plant adjacent to the Tyson Foods processing plant will produce 3 million gallons of biodiesel per year.

"Soybean oil costs 33 cents a pound while chicken fat costs 19 cents... Tyson produces about 2.3 billion pounds of chicken fat annually from its poultry plants. That's about 300 million gallons that could be converted to fuel."

So our carnivorous ways could help us at the pump as well. And for those interested in soybean futures, the right time to buy could be now.