US boho factor reaches 17-month low on falling soybean oil prices

11.04.2017

The relationship between the feedstock soybean oil and blendstock heating oil that the US biodiesel industry uses to gauge costs and margins reached its lowest level in more than 17 months Monday.

The "boho" factor, as the relationship is also called, fell 3.9 cents to 66.32 cents/gal, the lowest level since it reached 65.86 cents/gal on November 19, 2015.

A lower boho factor signals lower biodiesel production costs and better blending economics, improving biodiesel margins. The "boho" factor is calculated by multiplying the cost of a pound of soybean oil by 7.37 -- which is the industry standard for the yield for soy methyl ester biodiesel -- minus the cost of a gallon of blendstock heating oil.

Monday's decline came as soybean oil futures fell 27 points to 31.35 cents/lb, the front-month's lowest level since reaching 31.17 cents/lb on August 9.

Soybean oil futures have fallen sharply in the last few weeks amid reports of a large soybean crop in South America. Tuesday's supply and demand estimates from the US Department of Agriculture are expected to show a large increase in the crop estimate.


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