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Canola still a bit player in U.S. biodiesel

(Resource News International) — Limited U.S. production of canola and an abundance of other feedstocks appear to continue to restrict canola’s use in the U.S. biodiesel sector.

Premiums being offered for canola oil in the U.S. food sector are absorbing the available supply from Canada as well, industry sources report.

Soyoil and animal fats continues to make up about 90 per cent of the feedstock used to make biodiesel in the U.S., according to Amber Thurlo Pearson, a communications officer for the U.S. National Biodiesel Board. In fact, 12 per cent of the total U.S. soybean crop is currently used to accommodate the demand from the biodiesel sector.

Canola oil, recycled cooking oil and some other select oils, make up the remaining 10 per cent of the feedstock used by the U.S. biodiesel industry, she said.

A survey by the U.S. Department of Energy’s National Renewable Energy Laboratory found that soyoil production volume during 2007 totalled 96.7 million U.S. gallons, 2.8 million consisted of used oil, 5.5 million gallons came from animal fat, 18.3 million gallons were made up of a mixture of vegetable and animal oils, 220,000 gallons consisted of cottonseed, 16.5 million of mixed vegetable oils and 110,000 gallons of canola oil.

Total U.S. biodiesel production volume in 2007 was about 394 million gallons, Pearson said. Large producers (over one million gallons) were responsible for 89 per cent of the 2007 biodiesel output, medium-sized producers (100,000 to one million gallons) were responsible for 10 per cent of the market and small producers (below 100,000 gallons) were responsible for the remaining one percent.

Annual U.S. biodiesel production was expected to hit the 650 million- to 700 million-gallon range by the end of 2008, said Alan Weber, director of market research for the National Biodiesel Board.

There were still a number of facilities in the process of coming online in the U.S., he said.

Dale Thorenson, assistant director at the U.S. Canola Association in Washington, D.C., said small canola output in the U.S. continues to limit how much is used in the biodiesel sector.

“To tell you the truth, most of the U.S. canola output goes directly into the food sector; it is not produced for biodiesel use,” he said.

Canola production in the U.S. in 2008 was pegged by Thorenson at just 677,000 tonnes, which was up from 659,000 in 2007 and 632,000 in 2006.

“There has been a small jump in U.S. canola output over the past couple of years, but the potential for further increases will be limited to how much winter canola will be grown,” he said.

The area seeded to winter canola was only 70,000 acres, Thorenson predicted.

Weber said there were hopes that canola area in the U.S. would hit two million acres on an annual basis by the year 2010, which would be double the one million acres that generally go into the ground now.

Flowing into food

Meanwhile, the amount of processed Canadian canola oil being shipped into the U.S. market also is not destined for the biodiesel sector.

Glenn Lennox, an oilseed analyst with the market analysis division of Agriculture and Agri-Food Canada in Winnipeg, said that while Canada’s processors were crushing canola at a record pace, entirely all of the canola oil that was making its way into the U.S., was for the food sector.

“There is at least one large biodiesel plant in the U.S. that uses canola as a feedstock, but after that, most use a variety of alternatives,” Lennox said.

Imperium Renewables, according to its website, officially opened its Grays Harbor facility in Washington state on Aug. 15, becoming the U.S.’s largest biodiesel plant. The plant has a 100 million-gallon annual capacity and produces some of the world’s highest-quality fuel.

The facility is capable of producing pure, unblended, B100 biodiesel refined from a variety of oils, including canola grown in Washington state and Canada as well as soy and many other crops.

Canola is generally the preferred seed to crush for the biodiesel sector as its oil content is higher than soybeans and its low saturated fat content has been linked to improved cold-weather performance.

The average oil content of canola has exceeded generally 42 per cent and means more oil is available per unit of seed, which ultimately makes more of the feedstock available for biodiesel production and less byproduct relative to other oilseeds. As a result, the biodiesel producer realizes greater efficiencies from canola than from other oilseeds with lower oil contents, notably soybeans.

But because of canola oil’s demand in the food industry and rising commodity prices, Lennox said it may be too costly for some biodiesel companies to continue using canola as its primary fuel source. With biofuel companies, as with any business, the price has to be right.

Weber noted canola oil currently is trading at a premium of eight U.S. cents per pound to soy oil, making it an expensive feedstock to use.

Biodiesel is a vegetable oil-based fuel derived mainly from crops such as canola and soybeans that burns cleaner in diesel engines than traditional petroleum-based diesel fuel. It’s thus considered key to reducing greenhouse gas emissions in diesel-powered sectors of the transportation industry.

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