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Bean oil dives limit-down nearly 7% after US Admin sets Biofuels mandate lower than market expected

Hope never dies. After Admin took the EV RINs off the table 3 weeks ago, there was much hope for higher biofuels mandates but that turned-out to be the wrong assumption. What is more worrying is that EPA indicated that they will lower mandated volumes for 2024 and 2025 which is not a good sign for investments. This now sets the trend and leaves EV RINs on back burner. That is a lot of bearish pressure when you consider the nearly 2.0 mil Metric Ton capacity expansion in HVO this year in the US. With D4 RINs at 1.50, we can now expect a major sell-off to follow as HVO capacity is simply adding way too many RINs supply which is a major economic factor for blending demand. Mineral oil refiners will eventually be happy with lower RINs. Another global factor is that US biofuels was the market maker and leader for feedstock. Expect this to subside somewhat. On the Vegetable oil side, Europe will harvest a bumper crop of Rapeseed in the next 60 days while the

Bean Oil -Palm Oil spread finally came under pressure and maybe forced to go back to more traditional values as it is hard to sustain such high spread. We will have to see where premium FOB paranagua end-up as best bids were -1500. We are in for a considerable amount of adjustment in Bean oil futures and re-testing 45cents level is in the card. Note that FAME (summer Biodiesel) values in Northwest Europe are still trading at +360 over ICE Gasoil while BOGO is nearly +490 for August.

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