A Strong Dollar Meets a Weakening BOGO Trend Despite High Levels

Biodiesel flat prices weakened across Europe today, extending a softening trend despite broadly supportive macro conditions. FAME 0 traded around $1,320–1,325/mt flat price, RME around $1,505–1,515/mt, and UCOME around $1,540–1,550/mt, all weaker than earlier in the week as buyers remained cautious and liquidity thinned except for UCOME. HVO Class II held at a towering $2,471/mt flat price, maintaining a premium of $900–1,150/mt over conventional biodiesel grades and underscoring how HEFA continues to dominate the high-end renewable fuel segment.

Forward biodiesel structures also reflected this weaker tone. BOPO traded at +126, down roughly 7%, marking a sharp correction but still indicating a historically wide bean oil–palm oil differential. POGO for the key third-month March position printed at +329, confirming that palm oil remains structurally cheap relative to gasoil-adjusted bean oil further down the curve. Europe’s central biodiesel indicator, BOGO, traded at +370 for December and +420 for January—both still elevated in absolute terms—but the technical picture deteriorated sharply as the 20-day WDMA crossed below the 50-day. This reproduces the exact pattern that preceded the late-2024 decline, creating the unusual combination of a high BOGO level but a weakening trend, and signaling mounting fragility beneath the surface.

Part of this fragility stems from a cooling in gasoil. Heat cracks remain historically elevated near $50/bbl, but flat-price gasoil eased as markets digested increasing chatter about quiet backchannel progress toward a potential Ukraine ceasefire framework. Even without confirmation, the prospect of de-escalation removed some of the geopolitical premium embedded in distillates. Backwardation remains steep, but forward buying lacks conviction, leaving biodiesel increasingly exposed to its own fundamentals. DXY (USD) strengthening is usually a good measure of the geopolitical situation improving.

Europe’s physical vegoil landscape is also shifting. New EU Commission data show that EU palm oil imports fell nearly 20% year-on-year between July and early November, dropping from 1.19 million tonnes to just 958,000 tonnes. The decline reflects expanding national restrictions on palm-based biofuels ahead of the 2030 EU-wide exclusion. Italy, Germany, Greece, Sweden, and Denmark all saw sharp reductions, while only the Netherlands, Belgium, and Spain increased volumes due to their hub roles. In principle, reduced palm availability should support POGO and BOPO, yet POGO’s firmness at +329 contrasts with BOPO’s correction to +126, underscoring a disconnect between physical fundamentals and futures spreads. Rising imports of waste oils and fats continue to compensate for lost palm flows, adding further distortion to the biodiesel balance.

The broader vegoil complex offered limited support. CME soyoil held modest gains on U.S. policy speculation and fresh Chinese buying, but the physical basis in Argentina and Brazil continued to soften. China’s crushers remain well supplied, and national vegoil stocks increased again last week. Even the 14 U.S. soybean cargoes purchased by COFCO were insufficient to tighten global oilseed balances. Rapeseed oil in Europe firmed to €1,100–1,110/mt flat price, sunflower oil saw improving demand, and Malaysian CPO edged higher on a softer ringgit, but none of these pockets of strength translated into firmer biodiesel prices.

Asia followed the same pattern. Dalian palm olein and soyoil posted marginal increases, but the divergence between BOPO at +126 and POGO (Mar) at +329 highlighted mixed vegoil economics without generating any meaningful demand pull for biodiesel. Rising Chinese vegoil inventories, stable freight, and tepid discretionary blending interest left exporters probing for demand rather than responding to it. Buying interest remained shallow across the region.

Even constructive structural news in Biofuels—such as LanzaJet’s first commercial-scale ethanol-to-jet production in Georgia—did little to improve sentiment. With flat prices for UCOME, FAME and RME continuing to weaken, and spread structures like BOGO (+370 Dec, +420 Jan) now being technically vulnerable, the biodiesel complex carries a distinctly defensive tone. HVO’s elevated flat price at $2,471/mt underscores the widening gap between HEFA and conventional biodiesel economics.

Unless gasoil re-accelerates or the forthcoming RVO numbers deliver a substantial bullish catalyst, biodiesel flat prices remain exposed. The combination of a still-high BOGO level but weakening trend, a softer BOPO, a firm but isolated POGO, and subdued physical demand suggests that the market’s supports are thinning—and the next move could be decisive.