Company: SDSYA
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001163609-25-000010
Chunk: 25

Company: SOUTH DAKOTA SOYBEAN PROCESSORS LLC
Filing Date: 2025-03-28
Form: 10-K
Item: Item 7
Chunk 25
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion along with our consolidated financial statements and the notes to our consolidated financial statements included elsewhere in this report. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance and achievements may differ materially from those expressed in, or implied by, such forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Information” at the beginning of this report.

Overview and Executive Summary

Our consolidated net income decreased from $70.4 million in 2023 to $20.3 million in 2024 as we encountered various changes in the market. In 2023, robust demand for soybean oil from renewable fuel markets propelled soybean processing margins to very high levels. By contrast, processing margins in 2024 were set back as the 

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industry experienced new challenges. Early in 2024, renewable fuel margins fell as the overproduction of renewable diesel and biodiesel in the market caused a sharp drop in margins and a corresponding reduction in demand for soybean oil. Imports of used cooking oil also surged to record levels, displacing soybean oil as a renewable fuel feedstock. Later in 2024, a lack of guidance and clarity from the U.S. government on the proposed rule changes in the 45Z Clean Fuel program created uncertainty in the biofuels market, causing biofuel producers not to purchase soybean oil feedstocks. Finally, new soybean processing capacity came online, causing overproduction of soybean meal and oil and depressing prices in the process.

In 2025, we expect markets to adjust and respond more positively than in 2024. Soybean meal and oil exports are currently tracking at a record pace, though imposition of tariffs by countries like Canada, Mexico, and China could slow the pace. Moreover, we have an ample supply of soybeans from last year’s crop which puts us in a good position production wise for the first half of the year. While we are still dealing with the uncertainties of the 45Z program, there is a strong desire to increase renewable fuel volume obligations and to address the imports of used cooking oil. We believe that we are positioned well to handle these challenges and deliver value and strong returns.

We are also encouraged by the progress of our new oilseed project, High Plains Processing, near Mitchell, South Dakota. Construction is on schedule, and equipment deliveries are nearly complete. Barring any inclement weather