Exhibit 10.3**Farm Credit Services of America****SECURITY AGREEMENT AND ASSIGNMENT OF HEDGING ACCOUNT**     Debtors:Siouxland Ethanol, LLC   Customer No.: 138039WHEREAS, the undersigned, Siouxland Ethanol, LLC hereinafter called “Debtor”, whose address isPost Office Box 147, Jackson, NE 68743-0147, carries an account (No. 29340) with FC Stone asBroker, hereinafter called the “Broker”, whose address is Post Office Box 4887, Des Moines, Iowa50306 for trading in commodities and contracts relating thereto;WHEREAS, Debtor is now and/or may hereafter become indebted to FARM CREDIT SERVICES OF AMERICA,PCA, hereinafter called the “Secured Party”, whose address is 5015 South 118th Street,Omaha, NE 68137.NOW, THEREFORE, it is agreed by and between the parties hereto as follows:1. Secured Party hereby may advance to Debtor certain sums of money for the purpose of hedgingDebtor’s inventory of certain commodities. Debtor agrees to deposit said sums in an accountwith Broker (“Account”) and agrees to employ said funds for the sole purpose of making hedgingtransactions to protect Debtor’s commodity inventory and shall not employ said funds fortransactions of speculation or investment in commodities futures.2. To secure payment and performance of Debtor’s obligations to Secured Party, and for thepayment of all monies which Secured Party may hereafter loan or advance to Debtor, Debtorhereby grants a security interest in and assigns and transfers to Secured Party all fundswhich may hereafter accumulate or become withdrawable from, or paid out of the Account,including any balance which may remain to the credit of the Account upon the closing thereof;subject, however, to the prior payment of all indebtedness of Debtor to Broker, as such mayexist from time to time, including fees and commissions, which may have been incurred inconnection with Debtor’s transactions with Broker, and to Broker’s lien, and the right offoreclosure thereof in connection with the indebtedness of Debtor to Broker (including, butnot limited to, any right of Broker to close out open positions without prior demand foradditional margin and without prior notice).3. As additional security for the obligations of Debtor to Secured Party, and for the payment ofall monies which Secured Party may hereafter loan or advance to Debtor, Debtor hereby grantsto Secured Party a continuing security interest in and to all commodities futures contractswhich Broker transacts for Debtor and all proceeds thereof; subject, however, to the priorpayment of all indebtedness of Debtor to Broker, as such may exist from time to time,including fees and commissions, which may have been incurred in connection with Debtor’stransactions with Broker, and to Broker’s lien, and the right of foreclosure thereof inconnection with any indebtedness of Debtor to Broker (including, but not limited to, any rightof Broker to close out open positions without prior demand for additional margin and withoutprior notice). Debtor shall execute and deliver to Secured Party all financing statements andother documents as Secured Party may reasonably request, in a form satisfactory to SecuredParty to perfect and maintain perfected the security interests granted and assignments made byDebtor to Secured Party in this Agreement.4. Broker is hereby authorized and directed to pay to Secured Party upon Secured Party’s demandall funds that may hereafter be withdrawable or payable out of the Account, and Debtor agreesthat Debtor will not withdraw or attempt to withdraw any funds or other property from theAccount except as permitted by this Agreement. Secured Party is hereby authorized and fullyempowered without further authority from Debtor to request Broker to remit to Secured Partyany funds that may be due to Debtor, and Broker is hereby authorized and directed to pay toSecured Party such sums as Secured Party shall so request or demand without the consent of ornotice to Debtor.5. If at any time during the continuance of any such contract or contracts, Broker requiresadditional funds in order to protect such contract or contracts, Secured Party may, at SecuredParty’s sole and exclusive discretion, pay to Broker on behalf of Debtor such amounts as maybe required to protect such contracts; provided, however, that Debtor shall in all respectsremain liable to Secured Party for any amounts so advanced pursuant to the terms of anyagreement entered into between Secured Party and Debtor in connection with the transactionscovered by this Agreement.6. Debtor hereby constitutes and appoints Secured Party Debtor’s true, lawful and irrevocableattorney to demand, receive and enforce payments and to give receipts, releases, satisfactionsfor, and to sue for all monies payable to Debtor, and this may be done in the name of SecuredParty with the same force and effect as Debtor could do had this Agreement not been made. Anyand all monies or payments which may be received by Debtor to which Secured Party is entitledunder and by reason of the Agreement, will be received by Debtor as trustee for Secured Party,and will be immediately delivered in kind to Secured Party without commingling.7. Nothing herein contained shall be construed so as to prevent Debtor from remaining the owner,subject to the interest of Secured Party of the Account with Broker. Until Secured Partyelects to the contrary and delivers notice of such election in writing to Broker, Debtor maymake such additional transactions in the Account with Broker as Broker shall be willing toaccept for execution. In the event Secured Party does make such election and does delivernotice to Broker, Debtor shall not thereafter execute any transactions in the Account andBroker shall not accept for execution any such transactions without the concurrence of SecuredParty except transactions in liquidation of any then outstanding commodity or futurespositions.8. Whenever Secured Party deems it necessary for its protection, it shall be entitled, withoutthe consent or concurrence of, or prior notice to Debtor, to direct Broker to liquidate anyand all then outstanding open positions in the Account and to direct Broker to pay to SecuredParty the credit balance as shall exist in the Account after such liquidation and after thepayment to Broker of all the indebtedness of Debtor to Broker in connection with transactionsin the Account.9. Any sums paid by Broker from the Account to Secured Party under this Agreement shall beapplied by Secured Party to the payment of any indebtedness owing by Debtor to Secured Party.The balance remaining after the payment of said indebtedness shall be paid by Secured Party toDebtor. The receipt or receipts of Secured Party for such funds
 

 
  so paid to it by Broker shall, as to Broker, operate as the receiptof Debtor as fully and as completely as if funds had been paid to Debtor in person and receipted for by Debtor.   10. Secured Party is hereby authorized and empowered to receive from Broker, and Broker is authorized and directed to deliverto Secured Party, copies of confirmations on all contracts executed for the Account of Debtor, copies of the monthly position andledger account of Debtor, and copies of any and all matters pertaining to the Account of Debtor with Broker.11. As between Debtor and Secured Party, this Agreement shall remain in full force and effected until canceled in writing bySecured Party, or by Debtor when and if Debtor no longer is indebted to Secured Party. Any cancellation of this Agreement shallbe without effect as to Broker until Broker is notified at the above address in writing by secured Party.12. Debtor hereby represents and warrants to Secured Party that the Account, accounts or security interests aboveassigned or granted have not heretofore been alienated or assigned except for the security interests previously granted by Debtorto Broker.13. This Agreement shall be binding upon Debtor, Debtor’s executors, administrators or assigns, and it shall be binding uponand inure to the benefit of any successors of Secured Party and Broker.   Date:     **Siouxland Ethanol, LLC**   /s/ Thomas Lynch,     *ThomasLynch, President*     /s/ Shennen Saitzman,    *ShennenSaitzman, Director*       FARM CREDIT SERVICES OF AMERICA, PCA(Secured Party)   Date:   October 27, 2006 By:   /s/ Shane Frahm     *Shane Frahm, Vice President***ACKNOWLEDGMENT****TO: FARM CREDIT SERVICES OF AMERICA, PCA (Secured Party):**Theundersigned FC Stone, whose address is Post Office Box 4887, DesMoines, Iowa, hereby acknowledges receipt ofa copy of the above mentioned Security Agreement and Assignment ofHedging Account and agrees to abide by the provisions thereof.No previous assignment or claims against the above described Account or accounts have been received by the undersigned.       This copy received  , 20 .                             (BROKER)            By:        (Title)