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Biodiesel/RD margin improves on year-end on both sides of Atlantic despite lower liquidity

Improvements in Biodiesel Gross margins in EU particularly notable on Rapeseed Methyl Ester as margin widens to $250/mt which is almost $100/mt improvement in a month. Rapeseed oil prices in EU are now flat through new crop. Meanwhile in US, IRS provided forward guidance on treatment of clean fuel & SAF credit for 2024. This is a direct production subsidy that will surely encourage front-end production yet Soybean oil ( largest feedstock usage in US) shows little open interest activity in forward H call options. This would point out that US Obligated parties coming out of 2023 very long RINs yet RINs are still priced over 80c/gal. Feedstock prices continue to soften in US as soy crush margins still showing 1.40c/bushels ($51/mt) with Dec futures coming off board at less than 50c/lbs. Concerns about Brazil northern Mato Grosso crop remains but rains have now arrived. Only threat to Biodiesel/RD margins here is Gasoil continued weakness despite heat-crack at nearly $40/brl which must be tied to macro economic picture particularly demand in EU.

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