BOGO Finally Breaks Before the Long Weekend

With U.S. markets closed on July 3, the relevant print is July 2 settlement plus July 3 European screens. The message is clear: BOGO finally broke ahead of the long weekend. This was driven by gasoil strength and soybean oil losing short-term technical momentum. July ICE gasoil settled at $942.75/mt, up $16.25, August at $922.25, up $19.50, and December at $805.75, up $12.25. July/December gasoil backwardation widened to $137/mt, up $4, while August heating oil rallied 5.55 c/gal to 323.77 c/gal and the August/December heating oil spread widened 2.15 c/gal to 25.74 c/gal. CBOT bean oil was flat to soft on the settlement sheet, with August at 66.77 c/lb, up 0.08, September at 66.34, up 0.03, and December at 65.43, up 0.01. The weekly chart did more damage: soybean oil broke below its 20-day weighted moving average after trading as high as 71.77 c/lb and closing at 66.95 c/lb, down 4.35 c/lb or 6.10% on the week. It still holds above the 50-day weighted average near 63.47 c/lb, so this is not a full trend reversal yet, but short-term momentum has shifted. Gasoil, by contrast, traded back toward its 50-day weighted moving-average zone. The result was a cleaner BOGO move, with August BOGO down $17.74/mt to $549.76 and September BOGO down $15.84/mt to $573.03.

BOGO Weekly

This improves U.S. biodiesel and RD screens into a holiday where RFS risk remains the marginal driver. Dec26 D4 RINs settled at 2.534 on July 2, up from roughly 1.80 in early April on the three-month chart. The screen RD crush improved 4.93% to 1.0010 $/gal for September and 3.84% to 0.8826 $/gal for December, while the conventional biodiesel screen improved to 1.4110 $/gal and 1.2835 $/gal. The mandate math still leaves little margin for error. May bio-based diesel RIN generation at 736 million was well below monthly target-equivalent demand around 915 million, and producers operated near 77% of capacity versus EPA’s 90% assumption. April biofuels production did rise by 452 million gallons, up 5% from March and 27% y/y, with Jan-Apr production up 12% y/y, but the market still needs stronger run rates, imports, or both. Strong RINs and a lower BOGO give domestic producers better cover, but feedstock availability risk has not disappeared. US needs imports and I would expect to see arrivals in next few weeks. Official Data will only show this in September.

Europe was the most interesting corporate story. Eni and Mercuria announced a 50/50 global energy trading joint venture headquartered in Geneva, subject to regulatory approvals and closing conditions, covering oil, biofuels, gas, LNG, logistics and infrastructure rights. This is not a pure biofuels joint venture, but the biofuel relevance is direct. Eni brings refining, bio-refining and downstream optionality. Mercuria brings physical trading, risk management and logistics. In a European market where paper liquidity is thin and physical premiums move quickly, a larger integrated trader with access to both feedstock and finished product flows matters. The AOM window on July 2 already showed physical depth: FAME traded repeatedly at $520-525/mt premium, UCOME at $670-680/mt, RME at $599/mt, and HVO Class II at $1,290/mt. TFS marked July FOB ARA RME at $1,459-1,479/mt, FAME 0 at $1,414-1,434/mt, UCOME at $1,564-1,584/mt, and HVO at $2,624-2,644/mt.

Feedstocks gave mixed signals. European soft oils were lower in soy and sun, firmer in nearby rape. Dutch origin soy oil FOB mill was €1,100/mt for July and Aug-Oct, down €20, while German origin soy oil was €1,120/mt for July, also down €20. Dutch origin rapeseed oil was €1,295/mt for July, up €10, and €1,159/mt for Aug-Oct, up €2. EU origin sunflower oil FOB North European ports was $1,490/mt for August, down $5, and $1,470/mt for September, down $10. The protein side remains a drag on the German crush story: German rapeseed meal exports from July to April were nearly 1.2 mmt, down 19% y/y, with the Netherlands at 468 kt, down 21%, and Finland at 96 kt, down 43%. The same chart puts German soymeal exports at 1.717 mmt for July-April against 1.176 mmt for rapeseed meal. This keeps the rapeseed complex dependent on oil value, biodiesel demand and logistics. Kaub near 108 cm leaves Rhine cargoes draft-constrained, with 110-meter barges around 1,000 to 1,200 tonnes, or 40-60% of normal payload.

Palm is no longer giving bean oil a free pass. USD CPO screens were mostly lower, with August at $1,107/mt, down $10.50, September at $1,114.50, down $8.50, and December at $1,135/mt, down $7.75. Malaysia’s June SPPOOMA estimates showed production up 16.74%, yield up 16.21% and OER up 0.10%, while MPOB polls point to June production near 1.63-1.65 mmt versus 1.52 mmt in May and stocks near 2.48-2.50 mmt versus 2.43 mmt. Cash demand is still not chasing the market. CPO traded to India around $1,215-1,217/mt CFR west coast India for August, and less than 10 kt of soybean oil traded at $1,237/mt CFR west coast India for OND. Indonesia set July CPO reference at $1,000.90/mt, leaving the export tax at $148/mt plus the 12.5% levy. B50 remains the structural bull story, but June production and stocks limit the near-term upside.

SAF and RD supply remains messy. EcoCeres Johor reportedly ran briefly in June after Malaysia regulators allowed it to fulfill orders, then was expected to shut again for maintenance until September. The key feedstock point is more important than the restart: the plant was reported as allowed to process UCO, while POME use was restricted over odor and environmental concerns. For a 420 kt/year SAF, HVO and renewable naphtha facility, this shifts attention toward UCO availability and certification rather than broad palm byproduct optionality. Neste also plans a nine-week Porvoo turnaround between August and October with a cost above €400 million, although Neste states customer deliveries will continue through stored product and advance production. This keeps European renewable distillate supply reliant on planning and inventories during late-summer demand.

The macro close is not clean enough to go home short risk. WTI was near $68.61/bbl, down $0.08, and Brent near $71.82/bbl, up $0.02, which tells you the crude screen has removed much of the war premium. The physical oil balance tells a less comfortable story. Persian Gulf oil flows were shown at 18.2 mb/d, or 79% of normal, on a seven-day average, while global visible stocks drew 2.3 mb/d in June. Singapore onshore product stocks fell 4.1% w/w to 40.45 million barrels, and middle distillate stocks slipped to a three-week low while staying above 8 million barrels. Iran’s large funeral events for leaders killed at the start of the war add weekend headline risk, while tanker routing through Hormuz and the Oman lane remains a live variable. For biodiesel and RD, the actionable read is simple: BOGO finally broke, RINs stayed elevated, and distillate strength remains the main support for margins into next week.