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China planned Apr exports break distillate backwardation

Gasoil screen backwardation to Dec is now down 41% this month while backwardation to sep is down 48%. China announced April export quota for diesel of 800kt and 1.9 Mil mt for jet fuel. This will probably release more Asian diesel for Europe. Meanwhile situation in Biodiesel remains firm nearby with +$100/mt backwardation for FAME while structure for UCOME q3/q4 has a much wider contango now at -$71/mt so seems UCOME supplies for q3 already fully booked or certainly comfortable at the moment. With FAME trading at nearly $100/mt above BOGO, we think spot market is fully priced. EBB released manifesto reconfirming the protectionistic nature of European biofuels market as we still hear rumors of EU action against China on UCOME and/or UCO and observe that REPSOL has now purchased interest in Soybean crushing. Production reports on oilseeds still show ample supplies available as confirmed by the last USDA report on Global Soy production confirming that we still will operate rest of the year in an ample vegetable oil environment which should support Biodiesel margins.

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