Biodiesel producers are working in a challenging margin environment these days. The soybean oil-to-heating oil (BOHO) spread is often used as a measure of the profitability of producing biodiesel from soybean oil. Most other feedstock choices tend to follow the BOHO spread.

A higher BOHO indicates it is more expensive to produce biodiesel from soybean oil. When the BOHO spread is high, RIN values generally climb to help incentivize production. Without RINs, producing biodiesel at these levels would not be possible.

The market is no longer in this scenario. Soybean oil and feedstock prices have dropped significantly in the past several weeks. The BOHO has fallen from $2.30 per gallon in July to under a dollar per gallon last Friday.

…