During the quarter the biofuels industry worldwide continued to languish notwithstanding a
number of positive aspects developing in the sector.
Relatively stable feedstock prices, albeit at high levels persisted over the past three to
four months. As previously reported, soy bean oil prices rose very steeply in the March
quarter and peaked at over $0.70/lb in early March 2008. Since this peak, feedstock
prices have stabilized in the US$0.58 0.62/lb range and are currently at US$0.58/lb.
This combined with the increasing mineral oil price and the consequential impact on
diesel prices has enhanced the economics of the biodiesel industry. However, part of the
increased oil prices were somewhat masked by the fluctuating premium of biodiesel over
the heating oil price in the US. Biodiesel has been trading at a premium of over
$1.60/gallon above the heating oil/mineral diesel price on a spot basis. This is a premium
of $0.60 over the $1.00/gallon blending credit subsidy legislated by the United States
Government. The premium is driven by the mandated minimum requirement for biodiesel
in some States in the United States and the limited supply. Longer term/contract prices
for biodiesel are lower than the spot prices reflecting the biodiesel shortage for immediate
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