ANKENY, Iowa (DTN) -- Construction is underway on a $270 million soybean processing facility near Shell Rock, Iowa, slated to open in late 2022. For Rick Juchems and other area farmers, the plant can't open fast enough.
Mid-Iowa Cooperative based in Beaman, Iowa, in partnership with local and national investors, is building Shell Rock Soy Processing (SRSP). It will crush 40 million bushels (mb) of soybean annually, or 110,000 bushels per day.
Juchems dreads driving more than an hour from his Plainfield, Iowa, farm to the nearest soybean processing plant where he often has to wait in line for several hours to unload. That's why he looks forward to a 15-minute jaunt to SRSP that will feature state-of-the-art unloading facilities, with a capacity of receiving 30,000 bushels per hour.
When Juchems delivers soybeans to SRSP, he not only expects to get in and out of the plant fast but with more money in his pocket due to another competitive bid in the region.
"I think the new plant will be fantastic," Juchems said. "I only have a 600-bushel semi, so sitting in line for hours isn't a thrill. Being closer to a plant will save time and money.
"Plus, I expect to see a more moderate soybean market in the future," he added. "Local basis levels in the fall are usually about 65 to 80 cents (per bushel). Basis should narrow quite a bit. I would think at least 20 to 25 cents."
CRUSH EXPANSION
SRSP is part of an expansion of soybean crushing capacity in the Midwest. Archer Daniels Midland (ADM) announced earlier this week it will build the first soybean crushing plant in North Dakota. The $350 million facility in Spiritwood will process 37.5 million bushels a year.
Read about the plant here: www.dtnpf.com/agriculture/web/ag/news/article/2021/05/10/new-350m-plant-capable-crushing-150
The company will also spend $25 million to improve refining and storage capacity at its soy crush plant in Quincy, Illinois.
Mid-Iowa CEO Mike Kinley said new or updated soybean processing plants are needed for a host of reasons. Money and time top the list.
Even though soybean prices are currently high, Kinley said that's not always the case. He expects SRSP to increase competition for soybeans in its projected 100-mile draw area, which will likely increase bids and narrow local basis levels to maximize income potential long term.
"We're confident with a new destination point for soybeans, this facility will be very competitive buying soybeans and provide farmers a decent value," Kinley said. He declined to estimate how much the plant may increase local soybean values per bushel.
Time is also money, Kinley continued. He said Mid-Iowa semi drivers and farmers often have to wait three to six hours in line to unload soybeans at older, existing crush plants in east and central Iowa. The average age of regional plants, according to the cooperative, is 42 years.
Waiting in line to dump soybeans at two Iowa processors costs cooperatives and farmers $6.5 million annually in wages and lost productivity, Kinley estimates. "Even at the co-op, we've been struggling to make money delivering soybeans (until the latest price surge)."
He said cooperative members have clamored for years for a new processor with fast unloading capabilities that could hopefully boost their bottom line. That prompted Mid-Iowa's leadership to develop and move the project forward.
"SRSP offers a big opportunity to add value to local soybeans and boost the economy," said Bob Hogle, a Beaman farmer and Mid-Iowa board president, in a statement. "It will also help farmers save a lot of time. When you've waited in line at a soy processor for four, five or six hours to dump grain, it's such a waste."
GOOD TIMING
Growing demand for protein and biofuels make it the ideal time to build a new soybean crush plant, Kinley continued.
SRSP recently inked a deal with Phillips 66 to buy all of its soybean oil -- 4,000 barrels per day -- for sustainable fuel production, namely renewable diesel. Kinley said a shift is underway in the energy industry to reduce greenhouse gas emissions that's driving demand for soy oil.
"We're blessed to see the renewable diesel business and petroleum companies become significant players in the soybean industry," Kinley said.
SRSP also signed a multi-year contract with CHS Inc. to market its soybean meal and soybean hulls. The plant will produce more than 900,000 tons of each product that will be fed to livestock. Soybean meal and hulls will be sold domestically and internationally.
Twenty-five percent of SRSP's products are projected to be used in Iowa, while 75% will be exported from the state.
"Protein markets around the world have been very attractive," Kinley said.
Matthew Wilde can be reached at [email protected]
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