US boho factor falls to lowest level since February 2015

16.04.2018

The relationship between feedstock soybean oil and blendstock heating oil that the biodiesel industry uses to gauge costs and margins dropped Friday to its lowest level in more than three years.

The "boho" factor, as the relationship is also called, fell 2.74 cents to 21.99 cents/gal, the lowest since reaching 11.85 cents/gal on February 27, 2015.

Friday's decrease came as NYMEX May ULSD settled at $2.1002/gal, the fourth increase in five sessions. Recent geopolitical tensions in the Middle East and declining inventories have pushed the oil complex higher the past week.

On the other hand, feedstock soybean oil prices fell Friday, shedding 15 points to settle at 31.48 cents/lb.

A lower boho factor signals lower biodiesel production costs and better blending economics. It 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 -- minus the cost of a gallon of blendstock heating oil.

A lower boho factor encourages discretionary blending, or additional blending of biodiesel above what is required by federal biofuels mandates.

The boho factor was last below zero on November 14, 2014, when it reached minus 1.23 cents/gal.


platts
 

Readers choice: TOP-5 articles of the month by UkrAgroConsult