South Dakota Soybean Processors, LLC

What they do

The company operates three soybean processing plants and two oil refineries in South Dakota, producing soybean meal and hulls for livestock feed and soybean oil (crude and refined) for food, biodiesel, and chemical industries. It also provides construction and management contracting services for oilseed processing facilities. Owned by about 2,240 members, largely agricultural producers, it processes locally grown soybeans and is taxed as a partnership.

Revenue drivers

• Soybean processing volumes — Revenue growth is driven by crush volumes; the Mitchell facility, which commenced operations in Q4 2025, doubled total processing capacity. In Q2 2026, processing volumes increased 125.3% year-over-year.
• Soybean oil sales — Soybean oil prices and volumes are key; in Q2 2026, average soybean oil prices rose 35.0% year-over-year, supported by higher Renewable Volume Obligations (RVOs) under the Renewable Fuel Standard.
• Soybean meal and hulls — These co-products are sold to resellers, feed mills, and livestock producers. While not separately disclosed, they are a primary revenue stream alongside oil.

Recent performance

For Q2 2026, revenue was $326.9 million, up 195.5% year-over-year, with net income attributable to the company of $23.7 million versus a loss of $0.97 million in Q2 2025. For the six months ended June 30, 2026, net income was $19.4 million, compared to $3.4 million in the prior-year period. The improvement was driven by stronger processing margins, higher soybean oil prices, and the Mitchell facility ramp-up, partly offset by losses at High Plains Processing and non-cash mark-to-market losses on derivatives. In FY2025, revenue was $503.8 million, and net income attributable to the company was $17.7 million, with operating cash flow of -$38.9 million.

Strategy

Management focuses on increasing production capacity and vertical integration. The addition of the Mitchell facility (via High Plains Processing) nearly doubles capacity and is a key growth driver. The company also invests in value-added processing, such as refining and deodorizing oil for food customers, and supports Prairie AquaTech for soy-based protein feed. It aims to maximize member distributions while maintaining financial strength through capital investments.

Risks

• Commodity price volatility — Revenues, earnings, and cash flows are directly affected by market prices for soybeans, vegetable oils, petroleum, and natural gas, which are influenced by weather, disease, trade policy, and political conditions.
• Startup and operational risk at Mitchell — The new High Plains Processing facility has generated net losses and faced mechanical and operational challenges since commencing operations in October 2025; delays in reaching full capacity could hurt results.
• Derivative losses and margin impact — The company uses derivatives to hedge crush margins; rising board crush values have caused non-cash mark-to-market losses, which could persist and affect reported earnings.
• Inflation and interest rates — Inflation has raised costs for soybeans, labor, natural gas, and electricity, while higher interest rates increase borrowing costs under credit facilities; the company may not pass on all cost increases.

Outlook

Management expects a constructive processing margin environment through 2026 and into 2027, driven by sustained renewable fuel demand and favorable RVOs. However, they cite tight soybean supplies for the balance of the 2025/2026 crop year, uncertainty around the 2026 harvest, elevated industry crush rates that may challenge meal marketing, and geopolitical/macroeconomic volatility as near-term risks.