EIA reports that US Renewable Diesel and Biodiesel year-over-year use of Soybean Oil is now only up 2%, while overall feedstock use by the sector is up by 13%. Surprisingly, Canola use in August rose by 37%, and of course, Tallow was up by 22%. Meanwhile, in the markets, POGO continues its ascension to +$418/mt premiium, not far from the record made back in February 2022 at $522/mt. The market is essentially asking for rationing of palm, yet stock/inventory is accumulating in both Indonesia and Malaysia as destination buyers are reluctant to pay the current high unseasonal premium for palm. Since this rally in Palm is all based on expectations of a 5% increase in biodiesel blending rate from 35% to 40% in Indonesia, it is rather extreme and speculative as POGO is up by 457% since July 1! December BOPO (Bean Oil-Palm Oil) is now down by 315% to -$90/mt. This is truly uncharted territory. Since Palm oil accounts for 35% of the world's supply of vegetable oil and is generally excluded by both the US and EU for biofuels consumption, it is only Indonesia and Malaysia can support its consumption as a biofuel. Everyone knows that at the current premium over ICE gasoil, that is an expensive endeavor that requires steady non-biofuels exports to collect a massive export levy tax of over $375/mt. Meanwhile, the Northwest Europe market is already moving past winter bio to FAME0 trading, with the flat price up by nearly $76/mt to $1328/mt or +645/mt over ICE Gasoil. This has brought RME/F0 spread down to $31/mt from last month close of $117/mt. UCOME has barely changed as nothing fundamental has changed with a background and steady flow of rumors regarding DC and China investigations yet it is trading at less than $100/mt premium to F0.
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