1. Oilseed Workshop Mark Welch Texas AgriLife Extension Service Texas A&M University System Wichita Falls, Texas December 11, 2008

2. Conclusion  Vegetable oilseed prices are strong due to growing demand  Food  Fuel  Demand growth tied to  Population & income  Biofuel mandates  Environmental friendliness  Food versus fuel debate Pumping ethanol from corn in 1933

3. World Vegetable Oil Use Million lbs. % of supply used for fuel 38% 40% 46%

4. Biodiesel Mandates 500 million gallons in 2009 1 billion gallons by 2012 10% of energy used for transport must be biofuel by 2020 All diesel sold must contain minimum 5% biodiesel by 2010 Rapeseed Soybean Oil Soybean Oil

5. 2007 U.S. Biofuel Mandates Source: FAPRI and RFA Billion gallons

6. NEB of corn grain ethanol and soybean biodiesel production Hill J. et.al. PNAS 2006;103:11206-11210 ©2006 by National Academy of Sciences

7. World Biodiesel Production and Capacity MT/yr

8. Global Economic Growth

9. World Per Capita Vegetable Oil Use Palm, soybean, rapeseed and canola, and sunflowerseed kg

10. World Oilseed Harvested Area Million acres Source: USDA, PS&D

11. World Soybean Oil S&D 000 MT Stocks:Use Source: USDA, PS&D

12. World Rapeseed Oil S&D 000 MT Stocks:Use Source: USDA, PS&D

13. World Sunflowerseed Oil S&D 000 MT Stocks:Use Source: USDA, PS&D

14. Value of Soybean Oil and Soybean Meal per bushel $ 30% 45% 42%

15. Value of Canola Oil and Canola Meal per cwt $ 54% 71% 68%

16. Value of Sunflower Oil and Sunflower Meal per cwt $ 75% 90% 88%

17. Oil Prices Source: FAPRI and USDA ¢/lb$/gal

18. U.S. Vegetable Oil Consumption, excluding biodiesel Lbs.

19. U.S. Biodiesel Production Million gallons

20. U.S. Planted Acres million

21. U.S. Soy Oil Use Million lbs. 7.7% 9.9% 9.3% 10.2% 1.1% 1.5% % of soy acres used for biodiesel

22. Biodiesel Returns

23. Which Way Do You Turn? Conventional Alternative

24. Alternative Crops Production Crop Rotations Varieties Pesticides Special Equipment Storage/Processing/ Transportation Services Contracted Level of Production Yield Expectations Marketing Price –Open market –Contract specific –Base plus –Premiums and Discounts When is payment made? Crop Insurance Safety Net Services Firm’s Reputation

25. http://agecoext.tamu.edu/index.html Mark Welch, Economist—Grain Marketing JMWelch@ag.tamu.edu (979)845-8011 Alternative crops involve additional risks and opportunities Diversity of production may provide income as well as agronomic benefits Active effort is required to evaluate the complete “merchandise package”

26. Price Correlations dieseldiesel soyoilsoyoil Heating oilDiesel $/gal ¢/lb

27. Price Correlations Soybean Oil Price/lb. canolacanola sunflowersunflower