The relationship between feedstock soybean oil and blendstock heating oil that the biodiesel industry uses to gauge costs and margins rebounded Tuesday from hitting a three-month low Monday.
The "boho" factor, as the relationship is also called, gained 1.44 cents to minus 3.94 cents/gallon Tuesday, rebounding from the lowest level since February 27 hit Monday. The factor has tumbled nearly 16.02 cents month on month on steadily declining soybean oil futures.
The NYMEX July ULSD futures contract settled 1.15 cents lower Tuesday to $2.8658/gal, the lowest front-month settle since November 12. The July soybean oil futures contract settlement on the Chicago Board of Trade rebounded 4 points to 38.35 cents/lb Tuesday after opening the week by settling at a three-month low.
The plunging cost of feedstock soybean oil -- which is projected to have a record year in terms of global production -- is one of the lone bright spots in biodiesel margins at the moment, sources said.
Production has slowed in the early months of 2014 from record numbers of 2013 after the December 31 expiration of the $1/gal blenders tax credit.
The "boho" factor is calculated by multiplying the cost of a pound of soybean oil by 7.37 -- the industry standard for the yield for soy methyl ester biodiesel -- then subtracting the cost of a gallon of blendstock heating oil.
