ADM cuts biodiesel output as industry hit by weak margins

Wed Feb 25, 2015 1:23pm EST
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By Rod Nickel and Chris Prentice

WINNIPEG/NEW YORK Feb 25 (Reuters) - Archer Daniels Midland , one of the world's top biofuels producers, has slowed North American biodiesel output, the latest sign the industry is battling uncertainty over U.S. renewable fuel policy while the oil rout curbs demand.

The Chicago-based agri business has "temporarily" shifted production at its Velva, North Dakota, oilseeds processing facility from biodiesel to other products and cut production at its other North American facilities, ADM spokeswoman Jackie Anderson said in an emailed statement.

"We will continue to evaluate the market, and look forward to resuming production when conditions improve," she said.

With 140 million gallons of annual capacity at its wholly-owned Velva site and two joint ventures in Missouri, ADM is a sizeable player in the 2-billion gallon U.S. industry.

It also runs a plant with 70 million gallons of capacity in Lloydminster, Canada.

The ADM spokeswoman declined to give the timing and size of the cutbacks. The Northern Canola Growers Association said the switch in North Dakota took place a few months ago.

The move is a sign of the "strain" being felt across the industry after a year-long drop in biodiesel prices and oil's second-worst rout in history, said Steve Nicholson, an analyst with Rabobank AgriFinance in St. Louis, Mo.

"There's no question we'll see idling of plants and we may see consolidation or people getting out altogether," he said.   Continued...