At a large industry event in Fort Worth, TX - the Cleanfuels conference is clamoring huge US ramp up in renewable diesel that has broken Renewable Volume Obligation. As in Europe with tickets, there are large carryover RINs and RVOs being carried over to 2024 keeping demand on feedstocks in both EU and US very weak. BOGO has broken down to +181 which is a drop of 36% in last 3 months. Nevertheless the FAME trade in ARA continues to trade above BOGO at +210 which is much healthier than what we saw during 2023. We note that POGO has now gone negative through April in a period of seasonal tightness for palm oil noting that Gasoil has continued to remain firm and that Palm oil will struggle to find new use other than PME. USDA report to be released tmrw likely to reconfirm trader guesses on Argentina crop at 50 Mil MT Vs last year disastrous 25 Mil MT while Brazil likely to come in at 153 Mil MT. It is pretty clear from the event in Fort Worth that continued ramping up of Renewable diesel in US will cause massive oversupply of Renewable diesel which is already being felt on West Coast. Congressional action on allowing producers to avoid retiring RINs for export or use for Marine bunker maybe considered but this writer feels that it is unlikely that any major changes in RFS or RVOs are likely until after elections.
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