Company: SDSYA
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001163609-25-000010
Chunk: 11

Company: SOUTH DAKOTA SOYBEAN PROCESSORS LLC
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 11
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 to sell our soybean meal at discounted prices to our customers.

In addition, the moisture content of the soybeans that are delivered to our plants also influences our profitability and the efficiency of our plant operations. Soybeans with high moisture content require more energy to dry them before they can be processed. While we may recover some of these extra energy costs by paying producers less for high moisture soybeans, these savings may not be sufficient to offset our additional operating expenses.

Because soybean processing and refining is energy intensive, our business will be materially harmed if energy prices increase substantially. The price of electricity, natural gas and propane, the primary sources of energy for our plants, have steadily increased the last few years. If the trend in electricity, natural gas and propane prices continues, our energy costs will remain high and could adversely affect our profitability and operating results.

Transportation costs are a factor in the price of soybean meal and oil, and increased transportation costs could adversely affect our profitability. Soybean meal and oil may be shipped by trucks, rail cars, and barges. Added transportation costs are a significant factor in the price of our products, and we may be more vulnerable to increases in transportation costs than other producers because our locations in Volga and Miller are more remote than that of most of our competitors. Today, most of our products are sold FOB Volga or Miller, South Dakota, and those that are not, have the full transportation cost added to the contract. Transportation costs do not currently affect our margin directly; however, the added costs could eventually affect demand for our products.

Increases in the production of soybean meal or oil could result in lower prices for soybean meal or oil and have other adverse effects. New and existing soybean processing and refining plants are expected to be constructed or expanded in the near future. The increased expansion is expected to add approximately 750 million bushels in crush capacity per year within the next one to two years. Without a corresponding increase in the demand for soybean meal and oil, increased soybean meal and oil production may lead to lower prices for soybean meal and oil which could adversely affect our business.

We face significant risks associated with our new oilseed processing plant in Mitchell, South Dakota, including cost overruns, construction delays and operational issues. Our investment in the development and construction of our Mitchell facility, the cost of which will be approximately $500 million, is significant. We have contractually committed to invest approximately $100 million into the project, which will be our largest single investment in