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BOGO has crashed as Argentina enters Soy harvest

Screen BOGO for May is now down 37% in the last 3 months and down 7% just today. Meanwhile FAME 0 premium in Northwest Europe are trading at +410 which is now $183/mt premium to BOGO. Early harvest yield results in Argentina indicate a crop that is larger than 50 Mil MT but wet weather is hampering harvest progress. A series of protectionism is clouding the biodiesel world with inspection of UCOME producers in China this month by EU commission agent and visit by EPA of UCO producers. The recent visit by US secretary of Treasury of China did not quell worries as China cancelled large wheat imports from both US (500kt) and Australia (1 Mil mt) on Apr9.. It could of course be just an adjustment of China demand. Meanwhile, large amounts of Chinese UCO are on the water headed to US ports. Europe gross biodiesel margins remain firm for RME at $245/mt while on UCOME gross margins are $100 lower than RME (net of distillation) as producers relying more on domestic EU UCO rather than imports. All eyes will be on Argentina and results of varying investigations by both EU and EPA - note that we are now looking a La Nina for rest of year indicting more rain which makes grain.

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