Soybean Oil Demand in Biodiesel Sector Could Slow With Rise in BOHO Spread

Soybean Oil Demand in Biodiesel Sector Could Slow With Rise in BOHO Spread

The bean oil/heating oil spread (BOHO) represents the differential between soybean oil and heating oil futures and is used to gauge the practicability of discretionary biodiesel blending.  In other words, it reflects blending economics.  The higher the spread climbs, the more expensive it becomes to produce biodiesel. The BOHO hit its highest level in over two years, rising nearly five cents to 62.68 cents per gallon on Wednesday.  Plummeting heating oil values have dimmed the economic outlook on blending to a level not seen since November of 2017. In the past three weeks the market has seen heating oil prices reach an eight-month high and then quickly swing to a five-month low. Even with the Blenders tax credit (BTC) back in place, discretionary blending by biodiesel producers may be limited to the most efficient of producers.

Should biodiesel production slow further due to unfavorable economics, soybean oil demand from the biodiesel market could decline.  Given the strong crush and growing soybean oil stocks on hand, this could lead to a further decline in soybean oil prices unless demand for soybean oil rises in the food and/or export sector. While the biodiesel sector is not the primary driver in the overall soybean oil equation, it does represent 32 percent of projected 2019/20 demand from the latest USDA World Ag Supply and Demand Estimates.

Blog

03.02.2021

Fats, Oils, & Fuels Webinar 3/2/21: Customer Q&A

Fats, Oils, & Fuels Webinar 3/2/21: Customer Q&A

Video shorts from the Fats, Oils, & Fuels Webinar Report Our team of Senior Analysts break down questions from the live Webinar audience during the call on Tuesday, March...

02.26.2021

Soybean Oil Prices Rally Despite Decline in Soybean Futures

Soybean Oil Prices Rally Despite Decline in Soybean Futures

Soybean Oil Prices Rally Despite Decline in Soybean Futures

Vegetable oil prices were mixed on Friday as fund spreading lifted the front-end of the soybean oil...

02.26.2021

Grains End Week Higher Despite Two-Day Slide

Grains End Week Higher Despite Two-Day Slide

 

Weekly Soybean and Corn Prices Hold Close to Near-Term Highs

Grain prices finished the week stronger despite Thursday's sell off. Grain prices had limited follow through allow weekly prices remain...

Latest Tweets

We are excited to announce that we have acquired @thejake1865, expanding and strengthening our agriculture business and bringing new insights and capabilities to our customers. ... Learn more: http://spr.ly/6019HddQb

#FastmarketsAgriculture #agriculture #acquisition

Join us at our first virtual Hemp Conference looking at Hemp Fiber, Flower and CBD - https://thejacobsen.com/events/hemp-conference #hemp #cbd #cbg #industrialhemp

Load More...