The soybean oil/heating oil (BOHO) futures spread narrowed in the week to Monday August 5 amid losses in soybean oil and heating oil prices.
US recession worries triggered a freefall across most global equity and commodity markets on Monday. September soybean oil futures settled down but off session lows, ending at $0.4109 per pound on Monday, down by 59 basis points, or 1.42%, from a close of $0.4168 per lb on Friday August 2.
Week on week, the BOHO spread declined by 6.72% to a one-month low of $0.7215 per gallon. The spread reached a six-month high in early July after soybean oil futures rallied.
Soybean oil is the most widely-used feedstock in the production of biomass-based diesel, and the BOHO spread is used as a proxy to measure the profitability of producing biodiesel from soybean oil. The higher the spread, the more costly production becomes, and vice versa.
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