27 November 2007 21:05 [Source: ICIS news]
HOUSTON (ICIS news)--Higher crude oil prices are pushing up US vegetable oil (vegoil) prices due to increased demand from alternative fuels, market sources said on Tuesday.
Petroleum crude oil prices have continued to hover near the $100/bbl mark, fostering speculation and volatility throughout many markets, including vegoils.
Refined soybean oil prices have surpassed the 40 cents/lb ($882/tonne) mark for a number of weeks, as crude soybean oil futures on the Chicago Board of Trade (CBOT) have routinely been in the 45-46 cents/lb range in settlements.
On Tuesday, crude soybean oil front-month December futures settled at 46.30 cents/lb, slightly down the previous settlement of 46.69 cents/lb.
Market sources said 90% of the US vegoil market’s resources go into the giant food segment, serving both human and animal consumption requirements. Only the remaining 10% of the oils is available for alternative fuel use, according to a biodiesel market participant.
Biodiesel is the hardest hit thus far in US segments affected by high vegoil costs, according to alternative diesel-fuel players.
Biodiesel producers typically benchmark the highest margin viable cost on feedstock refined soybean oil at 40 cents/lb.
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