BOPO at +250, D4 RINs at 1.54, and -2000 Basis in Paranagua in sight

D4 RINs closed near 1.539 with intraday trade between roughly 1.515 and 1.560. At 1.54 per RIN, that represents 1.54 dollars per gallon of compliance value embedded in biodiesel economics. March screen margins have turned marginally positive, while May and July remain negative by roughly 15 to 20 cents per gallon even with D4 above 1.50. Forward economics remain dependent on stronger RIN pricing if EPA clarity is delayed into late summer and into the fourth quarter.

Chicago May soyoil last traded at 59.30 cents per pound, down 0.79 on the day, after trading between 58.50 and 60.20. At 59.30 cents per pound, flat price equates to roughly 1,310 dollars per metric ton. March options expired with nearly 40,000 contracts in the money across the 55 to 59 strikes, converting into fresh long futures positioning. The May option board shows heavy open interest stacked through the 70 cent strike with 63 days to expiry. A move from 59.30 to 70 cents per pound represents roughly 10.7 cents, or about 235 dollars per metric ton upside, implying flat price near 1,545 dollars per metric ton. A lot of that will also depend on what Gasoil does but Soyoil futures chart is constructive.

CPO trades near 1,050 to 1,060 dollars per metric ton. At current Chicago levels near 1,328 dollars per metric ton, BOPO sits near +250 to +260 dollars per metric ton. Historically this spread has tended to sit closer to +80 to +150. The widening reflects a US RFS policy premium embedded in bean oil futures in Chicago rather than palm strength.

USDA projects US bean oil use in biofuel at 17.3 billion pounds in 2026 to 2027, equivalent to roughly 7.85 million metric tons. That compares with roughly 6.71 million metric tons in 2025 to 2026 and 5.33 million metric tons in 2024 to 2025. Over two marketing years, projected US biofuel demand increases by approximately 2.52 million metric tons of bean oil. Exports are projected to fall from 1.2 billion pounds to 600 million pounds, removing roughly 270,000 metric tons from export availability. The board is pricing a structurally tighter US domestic bean oil balance, not a broad global vegoil shortage.

The global adjustment is occurring through South American basis. FOB Paranaguá soyoil basis is already more than 10 cents per pound under the board for forward positions, implying roughly 220 dollars per metric ton discount versus Chicago reference. Exporters are defending volume into India and other price sensitive markets by cutting basis rather than waiting for futures to correct.

If futures extend toward 70 cents per pound while palm remains near 1,050 to 1,100 dollars per metric ton, BOPO would widen toward 450 to 500 dollars per metric ton. Under that scenario, to maintain competitiveness into India and other destinations, Paranaguá basis could widen toward 20 cents per pound under the board. That implies roughly 490 dollars per metric ton discount versus Chicago, or around –2000 points. In that structure, the adjustment would not occur through palm strength but through deeper Brazilian discounts and tighter crush margins.

Palm’s upside is constrained by energy spreads. POGO trades near 333 dollars per metric ton for March, 359 for May, 368 for July and 397 for December. At 350 to 400 dollars per metric ton, palm already carries a strong premium to gasoil. Further palm upside without a fresh gasoil rally becomes difficult to justify, limiting palm’s ability to compress BOPO if bean oil rallies further on US policy.

Freight remains a structural factor. Total logistics cost from Mato Grosso to China is reported roughly 40 cents per bushel above last year, with inland costs up about 2.5 percent year on year and ocean freight up about 7 percent year on year. If US beans move aggressively into China, Chinese crushers convert those beans into meal and oil and may export incremental oil into third markets, adding pressure on Brazilian basis that is already deeply negative.

Policy timing remains central. Debate continues around RFS rulemaking, reallocation of exempted RINs, and E15 expansion while the administration manages a reported 12 billion dollar payout starting Feb23 to farmers impacted by tariff policy. If clarity on 2026 RVOs slips into late summer, forward biodiesel margins that are already negative 15 to 20 cents per gallon will require stronger D4 pricing to maintain output.

The structure is tight and asymmetric. Chicago near 1,330 dollars per metric ton. A 70 cent scenario implies roughly 1,543 dollars per metric ton. BOPO currently near +250 dollars per metric ton could go much higher (futures). POGO near 350 to 400 caps palm. Under that configuration, the risk is not palm chasing higher, but Brazilian FOB soyoil widening toward –2000 basis if US policy drives further upside in futures.