Marketers of crude glycerin were reporting prices that were steady or higher prices following reduced biodiesel margins in the week ended Friday July 19.
Lower margins could lead to a lower supply of crude glycerin if biodiesel production slows as a result. Glycerin is a co-product of biodiesel production.
The bean oil/heating oil spread (BOHO) is an economic indicator that reflects the profitability of biodiesel production from soybean oil. When the spread expands, production economics become more difficult, requiring RIN prices to rise to further incentivize production.
Last week, the BOHO spread went up by 9% while RINs only managed to rise by 1% and margins narrowed. If margins continue to compress, there will be a reduction in crude glycerin supply.
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