Our previous studies indicate that in Pennsylvania canola may not be as profitable as growing soft red winter wheat with a straw harvest because of the value of the wheat straw and the current difficulty of marketing canola.  An alternative to selling canola as an oilseed could be to process it on-farm to oil for biodiesel feedstock and meal for a protein feed supplement to livestock.  The objective of this study is to compare the profitability of soft red winter wheat production with canola and soybean processing, based on production/processing costs and commodity prices, adjusted by the current negative basis.  The costs and prices used in this study were based on a Penn State Farm Operations production case study.  Analysis of oilseed processing costs, process methods and hours of operation were estimated, based on a range of small-scale oilseed processing volumes from 1 to 24 T/day.  The results indicate that the local negative basis for soybean and canola oilseed prices creates a crush margin about $.06-$.08/lb oilseed.  This margin can cover the costs of a small plant processing 1 ton/day oilseed on a half-year basis, but may not be able to cover the complete costs of sporadically operated presses.  This analysis indicates that on-farm processing of both soybean and canola oilseed to oil and meal may be profitable for some farmers or groups of farmers based on the crush margin currently available.  Under the capital and operating cost assumptions of this study, production of both canola and soybean from a minimum of approximately 130 acres is required to break even on processing costs.  When operating above the break even point, winter wheat yields must be substantially greater than both canola and soybean yields to give the same return.