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LEONARD, STREET AND DEINARD, PROFESSIONAL
ASSOCIATION

150 South Fifth Street, Suite 2300

Minneapolis, Minnesota 55402

June 21,
2005

Ms. Jill S. Davis

Accounting Branch Chief

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, DC  20459-0306

  Re:

  South Dakota Soybean
  Processors, LLC

  Form 10-K for the fiscal
  year ended December 31, 2004

  Filed April 15, 2005

  File No. 0-50253

Dear
Ms. Davis:

We
represent South Dakota Soybean Processors, LLC, a South Dakota limited liability
company (“SDSP” or the “Company”) and have been authorized by them to provide
the attached memorandum (the “Memorandum”) responding to the Staff’s letter,
dated June 7, 2005, and the four itemized comments contained therein (the “Staff
Comment Letter”).  The Memorandum sets
forth each of the comments from the Staff’s Comment Letter, followed by the
Company’s response.  This cover
letter and the Memorandum were filed electronically via EDGAR, with three (3)
additional courtesy paper copies being sent to each of you and Mr. Duersch via
Federal Express.

If you have
any questions with respect to the matters covered in the Memorandum, please do
not hesitate to contact Mark Weitz at (612) 335-1517 or Marci Winga at (612) 335-1784.  We thank you for your cooperation.

Very truly
yours,

LEONARD,
STREET AND DEINARD

  /s/ Marci K.
  Winga

  Marci K.
  Winga

  cc:

  James Seurer

  Rodney
  Christianson

MEMORANDUM

  TO:

  Jill S.
  Davis and Jonathan Duersch  Securities
  and Exchange Commission

  FROM:

  James
  Seurer, Chief Financial Officer  South
  Dakota Soybean Processors, LLC

  RE:

  Response
  to SEC comments on Form 10-K for Fiscal Year Ended December 31, 2004

  Commission
  File No.: 0-50253

  DATE:

  June 21, 2005

The following memorandum
has been prepared with the assistance of our counsel and accountants in
response to the SEC comment letter dated June 7, 2005, regarding South
Dakota Soybean Processors, LLC’s Form 10-K for the Fiscal Year Ended December 31,
2004.

We specifically acknowledge 1) that we are responsible for the adequacy
and accuracy of the disclosure contained in our filings; 2) that Staff comments
or changes to our disclosures in response to Staff comments do not foreclose
the Commission from taking any action with respect to such filings; and 3) that
we may not assert Staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United
States.

If you wish to discuss any
of these responses, or if you have any questions, please feel free to call our
counsel, Mark Weitz at (612) 335-1517 or Marci Winga at (612) 335-1784.

We have reproduced the Staff’s comment in boldface print below, with
our response to such comment inserted directly below.

General

1.                                      Please
correct your file number to 0-50253 in your next filing under the 1934 Exchange
Act.

We will comply
with this comment and correct our file number in our next filing under the 1934
Exchange Act.

Report of
Independent Registered Public Accounting Firm, page F-2

2.                                      We
have noted your disclosure on Form 8-K dated January 18, 2005 relating to
your change in auditor from Eide Bailly LLP.
Based on your disclosure, we note that Eide Bailly advised you that they
believed certain services related to the preparation of your financial
statements were in violation of Rule 2-01 of Regulation S-X.  Please clarify, in detail, the nature of
these services and identify all periods for

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which
Eide Bailly had performed such services.
Demonstrate how Eide Bailly was able to appropriately review or audit
financial reports in the periods for which these services were performed.  We may have further comment.

As reported in our Form 8-K for the third
quarter of 2003, our Chief Financial Officer resigned in October 2003.  As a result of that unexpected event, Eide
Bailly LLP assisted our controller with certain ministerial aspects of the
consolidation of our financial statements and related elimination entries, in
connection with the preparation of our consolidated financial statements for
the year ended December 31, 2003, and for the quarter ended March 31,
2004.  Specifically, we provided Eide
Bailly LLP with spreadsheets containing our financial statements, and Eide
Bailly assisted with certain eliminations of intercompany accounts and made the
respective changes to the spreadsheets.
It is our understanding that Eide Bailly LLP relied on the exception,
previously identified in Example 6 of Section 602.02.c.ii of the Codification
of Financial Reporting Policies, describing the unexpected resignation of a
company’s comptroller, in performing these engagements.   It is our further understanding that when
this exception was later rescinded, Eide Bailly LLP re-evaluated its
involvement with the review of the March 31, 2004 quarterly financial
statements. Eide Bailly LLP’s conclusion was that its assistance might have
been construed to impair the firm’s independence, thereby possibly impairing
its independence on all subsequent work related to the 2004 financial
statements.  As a result, upon the
resignation of Eide Bailly LLP, on January 18, 2005, we engaged our subsequent
and current auditors, Gordon Hughes and Banks, to re-perform the reviews of the
financial statements for the quarters ended March 31, 2004, June 30, 2004 and
September 30, 2004, and to audit our annual financial statements for the period
ending December 31, 2004.  Gordon Hughes
and Banks’ review of our 2004 quarterly financial statements was completed,
without requiring any changes, prior to the filing of our Form 10-K for 2004.

Management’s
Discussion and Analysis

Results
of Operations, page 12

3.                                      We
note your disclosures generally identifying soybean meal and soybean oil as
your core business products which accounted for 60% and 37%, respectively, of
sales for the year ended December 31, 2004.  We further note that your disclosures
identify that you operate a soybean processing plant and a soybean oil
refinery, and sell soybean meal and refined soybean oil to different types of
customers.  As such, it is unclear
whether these products represent operating segments as defined in paragraph 10
of SFAS 131.  Please describe to us the
process used internally for monitoring the financial results of these different
product groups.  Please identify your
chief operating decision (CODM) maker and provide to us the reports reviewed by
your CODM to manage these operations and allocate resources.  Tell us how you have considered these
operations in relation to the definitions and disclosure requirements of SFAS
131.

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To clarify, we
do not view our operations as different segments of the soybean market because
soybean meal and soybean oil are two products of the same crushing and oil
extraction process.  There is no
allocation of resources or raw materials between the two products.  Soybean meal is a byproduct of the crushing
process that is left over after the oil has been extracted from the bean.  Refining the “crude” soybean oil that has
been extracted from the bean is merely a value-added addition to the production
of soybean oil.  We do not believe that
the fact that we sell the soybean meal after the crushing process and further
refine the extracted soybean oil makes them separate operating segments.

Prior to 2002,
we sold our soybean oil in “crude” form with no additional processing primarily
to one vegetable oil refiner that refined the oil to make it fit for human
consumption.  In 2000, we began to
question the long-term viability of relying on a single customer to purchase
our oil and began looking for alternative markets in which to sell the crude
oil we were producing. After much consideration, we decided instead to obtain
refinery equipment that would permit us to process our crude soybean oil
produced in the crushing process into refined and bleached oil (the first two
stages of refining that are required to produce a soybean oil fit for human
consumption).  This value-added refining
process allows us to receive a processing premium when selling the refined and
bleached soybean oil, rather than crude soybean oil, to vegetable oil refiners
for further processing.

In addition to
the integration of the production of soybean meal and refined and bleached
soybean oil, the sales and marketing of soybean meal and refined and bleached
soybean oil is also substantially integrated.
Our purchase price of soybeans and sale price for soybean meal is
established from the current price of each respective commodity on the Chicago
Board of Trade (“CBOT”) plus or minus an adjustment for local basis.  The sale price for refined and bleached
soybean oil is established from the current price of crude soybean oil on the
CBOT plus or minus an adjustment for local basis and plus a fixed toll
processing premium per contract for our refined and bleached oil.  Because commodity prices fluctuate daily and
the timing of selling soybean meal and soybean oil relative to the time of
purchasing soybeans is not instantaneous nor proportionate to the yield of
bushel of soybeans, managing the price relationship between both products and
soybeans is critical to the profitability of our business.  Accordingly, as described below, our
Commercial Department handles the merchandising of both soybean meal and
refined and bleached soybean oil.

Our chief
operating decision maker (CODM) is our CEO, Rodney Christianson. Reporting to
Mr. Christianson are our Commercial Manager, Thomas Kersting, and Operating
Managers, Rodney Fenske for soybean processing, and Michael Noble for the
refined and bleached oil refining.  Our
Commercial Department, under Mr. Kersting’s supervision is responsible for our
risk management, procuring our soybeans and selling our products, which
includes establishing our local basis for soybeans, soybean meal and soybean
oil (crude or refined and bleached). Mr. Fenske and Mr. Noble are responsible
for the safe and efficient operations of their respective operations.

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Several
reports are generated for us to manage our business. Key reports reviewed and
monitored by our CODM include: our daily position report, which summarizes our
inventory, future contracts, cash contracts and hedges for soybeans, soybean
meal, and soybean oil; a hedging trade confirmation from Country Hedging that
covers hedges in soybeans, soybean meal and soybean oil; daily production
reports; monthly financial statements; monthly margin analysis; monthly yield
analysis; goals and standards for operating units; and a monthly capital
investment report.  We do not believe any
of these reports meet the definition of discrete financial information in SFAS
131.  We do not create a report showing
profitability of a “refining segment.”
We do not charge the refinery for the crude soybean oil processed, nor
do we allocate any other general costs to this process.  Our CODM and the rest of management only see
a report detailing the “production” costs associated with refining and
bleaching the oil. These costs include chemicals necessary to refine the oil,
maintenance, and personnel costs. The report is simply used to oversee that our
employees are tracking their costs and possibly cutting them where
appropriate.  While we do not believe
that these reports are of the nature requested in your comment, we would be happy
to provide you with copies.

Financial
Statements

Notes
5.  Equity Investment in Minnesota
Soybean Processors, page F-15

4.                                      We
note your disclosure regarding your investment in Minnesota Soybean Processors
(MnSP) which you account for using the equity method.  Given that the loss in MnSP appears to exceed
the 20% threshold of your consolidated loss from continuing operations, before
taxes, it is unclear why you have not included audited financial statements for
MnSP for the year ended December 31, 2004 in your filing.  Refer to Rule 3-09(a) of Regulation S-X.  Please submit to us your significance
calculation of MnSP and demonstrate why it is appropriate to exclude audited financial
statements for MnSP for the year ended December 31, 2004, if that is your
view.

We recognized
a loss of $54,626 with respect to our investment in Minnesota Soybean
Processors (“MnSP”).  This corresponds to
our proportionate share (approximately 6.95%) of MnSP’s loss during the period
from August 31, 2004 through the end of the year, which is the period we
owned the investment.  During that
period, the amount of loss incurred was not proportionate to MnSP’s total
annual loss of $4,474,525 because a disproportionately large amount of such
loss was incurred earlier in the year, prior to our investment.  Our review and analysis shows that the
$54,626 loss we recognized for MnSP did not exceed the 20% threshold.

It appears
that the Staff may have calculated the 20% threshold using the line item “Income
Before Income Taxes and Minority Interest of Subsidiary” of $12,852, which
includes 100% of the loss of $1,611,410 incurred by our consolidated
subsidiary, Urethane Soy Systems Company (“USSC”).  Since we only own 58% of USSC, 42% of the net
loss of USSC, or $676,792, is attributable to the minority interest of USSC, as
shown in the Minority Interest in Net Loss of Subsidiary.  In calculating the 20%

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threshold
under Rule 3-09(a) of Regulation S-X for preparation of our 10-K, we used “Net
Income Before Income Taxes” or $689,644,
not “Income Before Income Taxes and Minority Interest of Subsidiary.”

The following
is our significance calculation for our investment in MnSP.  Our initial calculation was based upon 2004
results:

  Net Income
  Before Income Taxes

  $

  689,644

  Net Loss in
  Equity Investment in MnSP

  54,626

  (1)

  Calculation
  Base

  $

  744,270

  Threshold

  20

  %

  20%
  Threshold

  $

  148,854

  Our
  Recognized Loss in MnSP

  (54,626

  )

  Excess Over
  20% Threshold

  $

  94,228

                                                Our conclusion
based upon our initial calculation was that the loss in MnSP did not exceed the
20% threshold and therefore audited financial statements of MnSP were not
required to be included in our 10-K for the year ended December 31, 2004.

                                                Further
after review of the computational provisions contained in Regulation S-X Rule 1-02(w)
Computational Note 2, we concluded another calculation was required.  Because our consolidated income for 2004 was
more than 10% lower than the average of our consolidated income for the last five
years, such average should be substituted for purposes of the calculation.  The calculation of the average is as follows:

  Net Income
  Before Income Taxes

  2004

  $

  689,644

  2003

  $

  3,263,350

  2002

  $

  7,132,726

  2001

  $

  7,735,353

  2000

  $

  5,827,201

  Average

  $

  4,929,635

  Net Income
  Before Income Taxes - Average

  $

  4,929,635

  Threshold

  20

  %

  20%
  Threshold

  $

  985,927

  Our
  Recognized Loss in MnSP

  (54,626

  )

  Excess Over
  20% Threshold

  $

  931,301

(1) This loss was
added back in accordance with the computation provisions of Regulation S-X Rule
1-02(w) Computational Note 1.

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Our conclusion
based upon the additional guidance contained in the computational notes of
Regulation S-X Rule 1-02(w) is that we are not required to file separate
financial statements for MnSP in our 10-K for the year ended December 31,
2004.

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