BOPO Breakout or Blow-Off? Cracks, Crude, and South American Supply Loom

The BOPO spread (Bean Oil – Palm Oil) has surged from –90 on January 3 to +112.82 today—an extraordinary 200-point reversal that reflects tightness in global vegetable oil markets. Yet under the surface, there are growing signs that this rally may have overreached. In Brazil, FOB Paranaguá premiums for soybean oil have collapsed, now trading at $480 under futures versus a $270 discount earlier this year. This divergence between paper and physical markets suggests that the recent strength in futures is not supported by real demand—and that a correction may be near.

BOPO

Adding fuel to the geopolitical fire, the U.S. has reaffirmed a total tariff burden of 245% on Chinese imports, combining Trump’s new 145% measure with legacy duties. While there is technically no new escalation, the tone has shifted significantly. Washington is now warning other Asian exporters not to act as intermediaries for Chinese goods, effectively drawing trade battle lines across the Pacific. With the euro trading at 1.14 and the dollar index (DXY) below 100, financial markets are still digesting this threat to global supply chains—though a dollar bounce may soon emerge.

DXY

In Europe, ARAG barge activity remains strong. FAME 0 settled at $1,311/mt and UCOME at $1,449/mt, with premiums over gasoil reflecting strained logistics and low Rhine levels. RME continues to command a premium, supported by limited rapeseed oil availability. However, a steep €100/t backwardation between spot and August rapeseed prices signals imminent relief as the harvest approaches. Meanwhile, BOGO narrowed today to +426, and ICE gasoil continues to show technical weakness, even as diesel cracks remain elevated.

On the U.S. side, D4 RINs are up to 1.074, but screen biodiesel margins remain deeply negative at –31 c/gal, squeezed by rising feedstock costs and soft blender economics. With U.S. exports constrained by tariffs and Latin American crushers scaling up, fundamentals remain shaky. Crucially, Brazil has now confirmed it will raise its biodiesel blending mandate from B14 to B15, effective this April—a strategic move to absorb domestic bean oil and stabilize prices as soybean processing ramps up post-harvest.

In sum, today’s BOPO spike is not a story of soaring demand, but a symptom of supply chain timing mismatches. As South American crushing volumes rise and export discounts widen, soybean oil faces significant headwinds. The combination of geopolitical disruption, refinery-driven diesel output, and uneven biodiesel margins leaves markets jittery. This rally may have one last gasp—but the physical market is already pulling the reins.

ICE Gasoil