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Biodiesel crush margin follows improving diesel cracks

Diesel barge margin in northwest europe back to $26/brl although there was little changes in stocks at 2.12 Mil MT. What strengthened the market seemingly is news that April Baltic shipments of Russian gasoil were going to be 16.4% lower at 1.4 mil MT. RME/F0 narrowed even more with gross margin on RME production at $237/MT basis spot replacement. Europe has been both wetter and warmer than usual and the Rapeseed crop is quite advanced - looks like a bumper crop to me. Soybean harvest in Brazil is almost completed at 78% but most importantly they are shipping record soybeans monthly amounts at 12.63 Mil MT of which 72% going to China. Expect same from Argentina as China promoting sourcing from SouthAmerica Vs US. With demand in China forecast to be lower and US being a residual supplier, it would appear US Soy exports will be reduced leaving ample stocks for US crushers. We are finally seeing paranagua soy oil premiums coming under pressure with bids falling back to -850. Think we will see the Jan lows -1200 for Soyoil in paranagau again next month as Argentina begins to harvest their bumper crop of Soy. Weather remains hot in the entire southern hemisphere but precipitation is higher than normal in Argentina - some drying would be good for harvest.

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