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BOGO down 56.5% in last 3 months while Biodiesel cash values heavily discounted in Northwest Europe


BOGO sits at $130 premium to spot FAME in Northwest Europe. FAME trades today at +153 over ICE Gasoil or $1036.58. The whole market in Europe has moved into a state of contango on premiums for FAME (Q4/Q2 F0 is -78) while UCOME (Q4/Q2 is -75). RME or winter Biodiesel is nearly flat for premium. RSO values FOB Dutch mill are flattening and gross margins showing $135/mt which is not sufficient to cover costs (power+catalysts) yet abundance of Sunflower oil is still pushing the market for soft oils in Holland lower. Palm olein is now trading at 800/mt or $110 below SFO and still very little demand. Soyoil is finally starting to break down in Europe with prices still elevated at $256/mt over SFO. Should be noted that Bean oil is down nearly 20% in expectation of harvest. EPA released RINs generation last week and it appears that Renewable Diesel continues to ramp up with nearly 675 mil Gallons of D4 generated in Sep together with large imports from Germany and of course from Singapore. This means we have reached 5.7 Mil Gallons of D4 for the first nine months and RVO have reached in total 17.4 Billion which means that at the pace of nearly 1.95 Bil gallons a month we will end up with nearly 3Bil Gallons in excess of the mandate! Although we are seeing a lot of conventional biodiesel reducing production, we still think that these numbers are quite achievable especially in view of the weak markets globally but strong financial incentives to blend bio in the US which should price RINs below 0.50 sooner than later.



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