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  1. New Value-Added Products from Soybeans Opportunities for North American Soybeans Un8ited Soybean Board

  2. “The stone age did not end because we ran out of stones.” -Unknown Un8ited Soybean Board

  3. 1996 Anything you can make out of petroleum, you can make out of soybeans… exceptmoney 2006 Well maybe… Omni Tech International

  4. World Soy Production 1990100.5 Million Metric Tons Omni Tech International

  5. World Soy Production 2005 217 Million Metric Tons Omni Tech International

  6. North American Production & Utilization 2005 Marketing Year • Whole Soybean production 3.5 Billion Bushels • Soybean crush 2 billion bushels • Soybean Exports 0.9 billion bushels • Carryover and other 0.6 billion bushels Omni Tech International

  7. What is in a Soybean? Omni Tech International

  8. North American Soy Crushing • NA crushes 1.8-2 billion bushels or 54-60 million tons • 20-22 billion lbs of oil or about 2.8 billion gallons (10.6 billion liters.) • 43-48 million tons of soybean meal. Omni Tech International

  9. What About Value • Old value ratios (typical) • If whole beans were worth X, then oil was worth 2.0-2.2 X and meal is worth 0.9-1.0X. Example if beans are worth $6/bu ($0.10/lb) then oil is worth $0.22/lb and meal is worth $180/ton ($0.09/lb) • Oil value= $2.42 (35%) • Meal value= $4.41 (65%) • Return to crusher= $6.83/bu • Meal set demand, but oil made the margin. Omni Tech International

  10. What About Value • Recent value ratios (Summer 2006) • If whole beans are worth X, then oil is worth 2.6-2.8 X and meal is worth 0.8 X. Example if beans are worth $5.40/bu ($0.09/lb) then oil is worth $0.26/lb and meal is worth $150/ton ($0.075/lb) • Oil value= $2.86 (44%) • Meal value= $3.68 (56%) • Return to crusher= $6.54/bu • Oil is now determining value and driving demand Omni Tech International

  11. NA Soybean Oil Consumption Omni Tech International

  12. Soybean Oil Demand Drivers • Food demand flat to down, due to lost share (corn, canola), transfatty acid issue. • Feed use is incidental, up slightly with increased crush. • Industrial use is small compared to food use, but increasing rapidly due to biodiesel, plastics and other industrial uses. Omni Tech International

  13. Soybean Meal Consumption Omni Tech International

  14. Soybean Meal Demand Drivers • Food demand is increasing significantly due to soy dairy substitutes and concentrated proteins, still relatively small compared to feed. • Feed use is flat with increased crush. • Industrial use (coatings, adhesives) is increasing but remains very small percentage of total. Omni Tech International

  15. New Industrial Uses • Biodiesel • Plastics • Lubricants • Paints, Coatings & Inks • Solvents • Adhesives Omni Tech International

  16. Price Changes – 1990 thru 200512/1/05- Soy Oil 21¢/lb. Crude $58.42/barrel Gas $13.03/MMBTU6/16/06- Soy Oil 24.9¢/lb. Crude $70.20/barrel Gas $7.46/MMBTU Omni Tech International

  17. Biodiesel • Tax incentives and mandates in the US should drive biodiesel production to 240 million gallons (912 million liters) in 2006 • Up 320% from 2005 • Equal to almost 9% of NA soybean oil production. Omni Tech International

  18. Biodiesel EconomicsPer gallon Feedstock cost @$0.27/lb= $2.025 Other production 0.400 Plant gate $2.425 Less federal incentives -1.100 Before freight $1.325 Local spot petrodiesel* 2.055 Gross margin $0.730 *Energy Management Institute 5/17/06 Memphis TN Omni Tech International

  19. PLASTICS/PLASTIC COMPOSITES Market segments Current • Polyols for Polyurethane foams, films, molded parts • Plastic Composites Emerging • Thermoplastics Omni Tech International

  20. North American Polyurethane Demand(millions lbs.)* 2000A 2002 2004* PUR 6482 6393 6888 Polyol 3007 2956 3610 *2004 API End Use Survey Omni Tech International

  21. Polyols & Intermediate Prices 2001 – December, 2005 Cents per Pound Omni Tech International

  22. Soy Polyols • At least five different chemical modification approaches • Range of costs and uses • Molded foam • Slab foam • Carpet backing • RIM and SMC parts UTT Carpet Mill- Dalton GA Omni Tech International

  23. Flexible Foam Seating Cargill supplying Woodbridge in Ontario for use by Ford Omni Tech International

  24. Target Area:PLASTIC COMPOSITES • Soy-based thermoset resin • Polyester resin with fiberglass filler • Use by Ag Equipment manufacturers • Testing by auto makers • Polyurethanes • Testing pultrusion of parts • Testing molding techniques and different fillers Omni Tech International

  25. Polyester Intermediate Prices 2001 – December, 2005 Cents per Pound Omni Tech International

  26. LubricantsSoy Oil versus Petroleum Basestocks Soy Oil Advantages • Better lubricity • Lower volatility • Better viscosity index Soy Oil Disadvantages • Poor oxidative stability • Poor low temperature properties Omni Tech International

  27. Lubricant Basestock Prices 2001 thru October, 2005 Cents per Pound Omni Tech International

  28. LUBRICANTS &HYDRAULIC FLUIDS Current • Total loss applications • 2-cycle engine oil • Some hydraulic fluids • Transformer fluids • Metal working • Mold release and other industrial Omni Tech International

  29. LUBRICANTS &HYDRAULIC FLUIDS Researching • Crankcase oil development at Valvoline • Hydraulic fluid formulation at Afton (Ethyl Corporation) Omni Tech International

  30. Paints, Coatings & Inks • Traditionally largest industrial market for soybean oil. • Alkyd resins declining with decline of oil based paint. • Soy ink growing as price is more competitive. Omni Tech International

  31. Paints, Coatings & Inks Research • Water based (latex) paints • Powder coatings • UV cured inks. Omni Tech International

  32. Latex Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound Omni Tech International

  33. Powder Coatings Intermediate Prices 2001 – December, 2005 Cents per Pound Omni Tech International

  34. Solvents • Primarily Soy methyl esters • Same as biodiesel with slightly different standard. • New compounds in development. Omni Tech International

  35. Solvent Prices 2001 thru October, 2005 Cents per Pound Omni Tech International

  36. COMMERCIAL Parts cleaners & degreasers Hard surface cleaners Stainless steel equipment cleaners (Restaurants) Printing ink cleaners Paint strippers Adhesives removers Mastic removers Graffiti removers Asphalt cleaners & release agents Concrete & wood stains Hand cleaners Hand lotions Oil spill remediation Corrosion protectants Oil field equipment cleaners Plant floor cleaners SOLVENT MARKET APPLICATIONS Omni Tech International

  37. SME: Plastic waste disposal & reuse Highway paving & patching materials Pesticide carriers (mosquito larvicides) Mold & mildewcides Paper pulp recycling Alkyd coating carriers Stationary engine fuels (hydrogen) Soy Oil: Bioremediation (soil & groundwater) Metalworking fluids Emollients (personal care products) APPLICATIONS IN DEVELOPMENT Omni Tech International

  38. ADHESIVES • Primary market: Wood Adhesives • Based on soy flour or protein concentrates • Recently launched new use in interior grade plywood • Limited packaging adhesives based on soybean oil. Omni Tech International

  39. Adhesives Intermediate Prices 2001 – December, 2005 Cents per Pound Omni Tech International

  40. ADHESIVES Research • Improve water resistance to allow exterior plywood use • Lower viscosity to allow use in oriented strandboard Omni Tech International

  41. Fermentation Research • Produce ethanol from carbohydrates in soybean meal • Real goal is a lower cost protein concentrate • 70% protein • No indigestible sugars/anti-nutritionals • Improved storage properties. Omni Tech International

  42. Thank You Any Questions? www.omnitechintl.com Omni Tech International