Feedstock price falls more rapidly than biodiesel

Biodiesel producers using soybean oil as their feedstock saw margins improve despite the weekly average biodiesel prices heading lower during the week ending September 30, 2022.

The average weekly biodiesel price declined approximately one percent, while the average cost for RBD soybean oil fell four percent, and crude degummed soybean oil was off by two percent.

Upper Midwest B100 prices averaged $6.94 per gallon, down from $7.00 the week prior. Central IL RBD soybean oil prices averaged 81.824, falling more than three cents per pound, while crude degummed prices in Central Illinois dropped nearly two cents per pound to 73.42 cents.

Declining feedstock costs outpace softer biodiesel prices

The average weekly crude glycerin price held steady at 11 cents per pound, but many in the market feel prices might head slightly lower in the coming weeks.

The cost of methanol and natural gas remained unchanged (prices for these products are updated in arrears).

Biodiesel revenue was down nearly one percent during the week. At the same time, variable costs for RBD soybean oil users fell 3.5 percent, and crude-degummed users saw variable costs fall 2.1 percent.

RBD soybean oil margins improved from $0.30 per gallon over variable costs to $0.49 per gallon, and crude degummed soybean oil margins improved 6.6 percent to $1.11 per gallon over variable costs.

Variable costs include a 25 cents per gallon estimate for “other variables” beyond soybean oil, natural gas, and methanol.

The overall margin, which includes fixed costs, improved 3 cents to negative $0.05 per gallon for RBD users but fell two cents for crude degummed soybean oil.

The average weekly crude degummed soybean oil price is 16 percent below the April highs, while the average weekly biodiesel price is seven percent lower during the same period.

RBD soybean oil pricing is seven percent below the April highs

The bean oil/heating oil spread (BOHO) measures the profitability for producing biodiesel from soybean oil. The higher the spread, the more costly production. As the spread increases, renewable identification number (RIN) values generally rise.

The opposite tends to be true when the BOHO moves lower. The BOHO calculation uses crude soybean oil futures disseminated daily by the Chicago Board of Trade.

The value of the BOHO spread on Friday, September 30, was $1.43 per gallon, 15 percent below the week prior.

The 2022 biodiesel RIN was basically unchanged at $1.72¼ per gallon. ULSD futures increased four percent, while crude soybean oil futures at the Chicago Board of Trade fell two percent.