Ethanol Blog

Biodiesel Downturn vs. ULSD Futures Improve Blending Economics

Myke Feinman
By  Myke Feinman , Refined Fuels Reporter
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The decline in spot biodiesel prices relative to ultra-low sulfur diesel values have improved biodiesel blending economics, according to analysts.

"This has substantially lessened blending losses for biodiesel (net of the $1 per gallon tax credit) and explains why D4 RINs [Renewable Identification Numbers] prices have been essentially halved since the mid-July peak," according to a report published last week by Scott Irwin and Darrel Good of the Department of Agricultural and Consumer Economics at the University of Illinois.

Biodiesel spot prices hit a $5.26 per gallon high July 19, tumbling 11% to a low Sept. 18 at $4.69, and talked at $4.78 this morning. New York Mercantile Exchange ultra-low sulfur diesel futures with nearest delivery settled at $3.0894/gallon July 19 before peaking at $3.2254/gallon Aug. 29. The contract dropped to a low of $2.9630/gallon today, down 4.1% from July 19.

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