The soybean oil/heating oil spread (BOHO) spread settled at 97 cents per gallon on Friday September 27, up by approximately 3% from last week’s closing value of 93 cents per gallon. The BOHO spread has had a strong run over the past month and a half, up by 85% compared with August 15.

Rising soybean oil prices have caused the BOHO spread to widen. Crude soybean oil futures on the Chicago Board of Trade (CBOT) settled at 42.18 cents per lb on Friday, up by 3% from September 20 and by 7% from August 15.

The BOHO spread provides a quick assessment of market economics for using soybean oil as a feedstock in biodiesel and renewable diesel production. A rising BOHO indicates that fuel production is becoming more expensive, whereas a declining BOHO indicates a more favorable economic environment.

The rapid rise in soybean oil prices has left many biodiesel and renewable diesel producers in a negative margin situation, one source told Fastmarkets.

…