Average weekly central IL crude degummed soybean oil at 20-week low

Biodiesel margins improve thanks to lower soybean oil prices

Biodiesel margins received a substantial lift from soybean oil prices that swooned lower last week. The average Midwest soybean oil price fell double digits from the week prior. The average RBD soybean oil price was down 12 percent, and the average for crude degummed was 14 percent lower.

Margins for RBD soybean oil users pushed to their best level for the year, while margins for crude-degummed users hit an 18-week high. The EIA reported the price for natural gas increased, but methanol values were reported steady. Crude glycerin, a by-product of biodiesel production, saw price levels continue to fall and with glycerin refiners remaining in an over-supplied position, crude glycerin values may fall further.

The average weekly Biodiesel price dropped 4.5 percent last week and is 8.2 percent below values seen a month ago. Glycerin prices crumbled nearly 14 percent to 7.55 cents per pound and are at their lowest level since Jan 8, 2021. Glycerin prices have fallen nearly 25 percent over the past month.

The average weekly soybean oil price fell 12 percent for RBD and 14 percent for crude-degummed. The average RBD price is 17 percent below month-ago levels, while crude-degummed is 18 percent lower.

Volatility is expected to remain within the soybean oil market due to additional demand from renewable diesel producers as capacity is expected to increase in coming months.

Geo-political tensions show little signs of abating and continue to impact commodity market volatility in general. The spread in pricing between crude-degummed and RBD soybean oil edged fractionally higher but remained below 10 cents for a fourth consecutive week.

Prior to April 2021, RBD soybean oil averaged a price premium of nearly three cents per pound over crude degummed. The rise in renewable diesel capacity elevated RBD soybean oil prices relative to crude-degummed due to limited crushing capacity to supply the needed refined soybean oil. This caused the spread between RBD and crude-degummed to expand. The spread climbed as high as 25 cents but has narrowed in recent weeks following a projected increase in refined capacity.

Biodiesel revenue fell nearly five percent but was eclipsed by the drop in variable costs. Variable costs for RBD soybean oil users fell 11 percent, while crude-degummed users saw a 13 percent drop from the prior week. Margins for RBD soybean oil feedstock users improved from $0.14 per gallon over variable costs to $0.62.

Crude degummed soybean oil margins improved 63 percent to $1.34 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 48 cents to $0.27 per gallon for RBD feedstock producers, showing a profit for the first time in seven weeks. Producers using crude degummed soybean oil as feedstock had overall margin increase of $0.52.

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