Despite good US biodiesel and RD margins it appears we had some rearranging of positions on RINs. Although US doing well in an environment of lower feedstock prices -22% in the last 3 months, we can see that Heating oil has also come off only 17% in the same period. Since it appears that WTI cargoes now are featured deliveries on Brent as in previous expiry, it begs the question if the weakness we see in Europe will now start to contaminate US markets. We note that EU Biodiesel, that are not subsidized like in the US but only mandated in EU, are truly down on their knees. We see FAME still trading at +$220 over gasoil while BOGO is trading at +380. RME has recovered somewhat despite the fact that RSO was down another 35Eur/mt on the last day of May but at least 6% above palm olein prices in the Northwest European market. There is a large amount of political wind coming from wast oil producers in Europe who are complaining about low prices of RSO which has been $125 below the price of Used Cooking Oil. Most are blaming record imports of UCO and UCOME in Q1 from China but such imports have little to do with the situation in RSO but more to do with 1/the double-counting aspects and refiners preference to lower their mandated biodiesel volume to maximize decreasing crack margins and 2/record imports of oilseeds into Europe this year after a record harvest.
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