Calm Before the Storm: Biofuels Market Holds Breath Ahead of Weekend Positioning

Markets appeared to settle into a temporary lull on Wednesday, with biodiesel traders navigating steady price action in both Europe and the Americas. In the ARAG barge market, the RME/FAME 0 premium narrowed significantly to $107.50/mt, with RME trading at $1,444/mt and FAME 0 at $1,336/mt flat price. UCOME remained strong, holding a $102/mt premium to FAME 0 at $1,439/mt. While physical activity remained subdued, forward positioning hinted at a market anticipating volatility into the weekend.

The energy complex showed early signs of reawakening as ICE gasoil Jul/Dec backwardation rebounded to +$45.75/mt, up from +$31 earlier in the week. This suggests traders are bracing for tightening supply or a geopolitical trigger. Soyoil also displayed subtle strength with the Jul/Dec carry tightening to -0.44 cents/lb from -0.63 last week. Nevertheless, the biodiesel screen crush margin remains under pressure at -34 cents/gal, with D4 RINs last trading at 1.155, reflecting ongoing uncertainty in U.S. policy and muted legislative progress.

Gasoil

In South America, the tone was markedly softer. Argentine FOB soyoil traded at -550 points to August futures, with Paranaguá prints at -470, reflecting a heavier end-of-harvest tone and continued aggressive crushing. At the same time, Brazil’s second corn crop is coming in at a record 123.3 million metric tons, up sharply from both last month and last year. This development raises new concerns about domestic logistics, particularly for oilseed meal and oil movement through ports that may now be increasingly congested by corn flows.

European vegoil markets remain under the influence of changing spreads. In NWE ports, soy oil is €10/mt cheaper than rapeseed oil for July but reverses in August, where rapeseed oil trades €65/mt under soy, indicating a dynamic forward curve and seasonal reshuffling of demand. Meanwhile, Asian palm oil markets took a hit amid macro risk-off sentiment. Malaysian CPO futures fell over 3% to 3,986 ringgit/mt on ceasefire news between Israel and Iran, while Dalian and Zhengzhou vegoils followed with similar losses.

With geopolitical tensions lingering and Trump’s temporary ceasefire announcement still being tested, energy and agricultural markets seem to be in a fragile holding pattern. Little movement in Washington adds to the cautious tone. While today feels calm, the setup suggests that gasoil and distillate-linked products like biodiesel may be gearing up for a late-week rally. Traders should be prepared for volatility heading into the weekend, particularly if positioning accelerates amid renewed macro headlines.