{"title":"Revisiting biodiesel hedging","authors":"Jason R. V. Franken, Scott H. Irwin","doi":"10.1002/agr.21870","DOIUrl":null,"url":null,"abstract":"<p>Previous research found that both soybean oil and heating oil futures should be used to hedge biodiesel price risk. This was sensible because blending mandates caused biodiesel prices to be driven by that of its primary input—soybean oil. Much has changed in recent years, with plummeting demand during the coronavirus disease (COVID) pandemic, biodiesel plants struggling to break-even in 2020, and then incurring losses in 2021 as soybean oil prices skyrocketed with the rise of renewable diesel—a relatively new biomass-based diesel fuel in high demand largely due to green policies in California. This study revisits the appropriate strategies for hedging biodiesel production risk and finds that soybean oil has become a less important hedging vehicle. [EconLit Citations: Q420, Q410, Q480, Q160, Q110, Q130].</p>","PeriodicalId":55544,"journal":{"name":"Agribusiness","volume":"40 4","pages":"1002-1015"},"PeriodicalIF":2.1000,"publicationDate":"2023-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Agribusiness","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1002/agr.21870","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"AGRICULTURAL ECONOMICS & POLICY","Score":null,"Total":0}
引用次数: 0
Abstract
Previous research found that both soybean oil and heating oil futures should be used to hedge biodiesel price risk. This was sensible because blending mandates caused biodiesel prices to be driven by that of its primary input—soybean oil. Much has changed in recent years, with plummeting demand during the coronavirus disease (COVID) pandemic, biodiesel plants struggling to break-even in 2020, and then incurring losses in 2021 as soybean oil prices skyrocketed with the rise of renewable diesel—a relatively new biomass-based diesel fuel in high demand largely due to green policies in California. This study revisits the appropriate strategies for hedging biodiesel production risk and finds that soybean oil has become a less important hedging vehicle. [EconLit Citations: Q420, Q410, Q480, Q160, Q110, Q130].
期刊介绍：
Agribusiness: An International Journal publishes research that improves our understanding of how food systems work, how they are evolving, and how public and/or private actions affect the performance of the global agro-industrial complex. The journal focuses on the application of economic analysis to the organization and performance of firms and markets in industrial food systems. Subject matter areas include supply and demand analysis, industrial organization analysis, price and trade analysis, marketing, finance, and public policy analysis. International, cross-country comparative, and within-country studies are welcome. To facilitate research the journal’s Forum section, on an intermittent basis, offers commentary and reports on business policy issues.
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