BOPO Breaks Below $100: Soyoil Weakness Reshapes Market Dynamics

Biodiesel markets in Europe lit up today, with physical premiums in the ARA barge market climbing decisively. FAME 0 (F0) traded as high as $1,327/mt, RME reached $1,350/mt, and UCOME touched $1,391/mt—compressing the UCOME-to-F0 spread to just $64/mt. This tight range highlights either healthy availability of waste-based product or a pricing environment that no longer rewards higher GHG-saving fuels at the same premium. BOGO narrowed to +409, continuing its downward trend. In the background, rapeseed oil retains a solid €60/mt discount for August/September over soyoil, supported by favorable growing conditions across Europe, as confirmed by UFOP’s latest crop report.

In South America and Asia, spreads are adjusting to policy signals. Paranagua FOB soybean oil remains firm for July with bids at -120 under CBOT, while Aug/Sep values ease back to -330. But the most significant development is the steep decline in the BOPO (bean oil–palm oil) spread, which has broken below $100/mt—down from a peak near $200/mt just two weeks ago. This collapse isn’t driven by palm strength. Instead, it reflects a sharp correction in soyoil futures triggered by delays in U.S. guidance on 45Z tax credits and the looming backlog of unresolved Small Refinery Exemptions. Traders are shedding length in soyoil amid policy paralysis, dragging BOPO down in the process.

The BOPO spread has undergone a historic collapse from record highs in 2022 to negative territory in early 2025, before recently recovering near $100/mt. The latest retracement is driven not by palm strength but by U.S. soyoil weakness amid delays in 45Z guidance and unresolved SRE decisions.

In the U.S., biofuels policy is once again clouded by mixed messaging and political noise. While the Senate returned from recess on June 2, progress on the renewable fuels package has stalled, with lawmakers now expected to send a revised draft back to the House. But the bigger disruption may be rhetorical: former Congressman Lee Zeldin, now actively advising energy policy circles, has praised Alaska’s RFS exemption as a model for success. Coming from a prominent voice close to EPA decision-makers, this framing undermines the consistency of federal RFS support and risks emboldening new regional pushbacks. The message to investors and obligated parties is muddled, just as confidence is already strained by inaction on SREs and 45Z.

In Europe, the Union for the Promotion of Oil and Protein Plants (UFOP) made a forceful statement today, urging the immediate abolition of double counting for waste-based biodiesel and co-processed volumes. I strongly support UFOP’s position. The current structure encourages reclassification games and has incentivized fraudulent imports, distorting the market and undervaluing genuine biodiesel blending. With quota prices under pressure and trust in sustainability certifications shaken by scandals—including phantom HVO capacity in Dubai—the call for tighter oversight and legislative reform is not only justified but overdue.

Notably, the price differential between HVO Class 2 and SAF has abruptly collapsed, with both now trading at parity in several hubs. This realignment is surprising and unlikely to hold. Under RED III, coprocessing gives refiners the ability to claim SAF credits from relatively modest biogenic inputs, driving down the effective cost of SAF blending. At the same time, Chinese SAF—unlike HVO—is not subject to anti-dumping or countervailing duties and can enter Europe duty-free, adding further downward pressure on SAF pricing. In contrast, HVO Class 2, which must be produced from fully renewable feedstocks and faces tighter import controls, remains physically constrained. These structural divergences suggest the current parity is a temporary pricing artifact—one that could soon reverse as feedstock scarcity and regulatory asymmetry reassert themselves.