D4s Bounce, RFS Bends: Exemptions Collide with Global Biofuel Flows

The biodiesel complex opened the week under heavy policy uncertainty as traders digested EPA’s sweeping action on small refinery exemptions (SREs). On August 22, EPA announced decisions on 175 petitions covering compliance years 2016–2024. The outcome: 63 full exemptions, 77 partial exemptions, 28 denials, and 7 ineligible petitions. That means 140 exemptions were granted in total. The striking fact is that there are only 38 small refineries in the United States eligible for these waivers, yet through repeat annual and retroactive filings they have managed to accumulate hundreds of petitions. Since 2013, more than 216 full exemptions and 77 partial exemptions have been granted across 462 petitions filed, effectively waiving compliance on billions of gallons of gasoline and diesel.

In Europe, Friday’s ARAG physical window set the tone heading into the weekend. RME traded around $1,390.38/t, FAME 0 at $1,370.38/t, and UCOME near $1,490.88/t, with premiums to ICE gasoil still historically high, though flat prices softened into the close. Discretionary blending remained profitable, but the lofty outright values looked increasingly unsustainable. Rotterdam rapeseed oil offers edged higher into the deferred months (€1,040–1,045/t NDJ), while sunflower oil held at $1,280/t OND. Ukrainian sunflower oil exports in July reached 464,000 tonnes, confirming that crushing is running stronger than expected and ensuring Europe remains well supplied.

Across the Atlantic, attention centered on soyoil, soymeal, and RINs. Nearby CME soyoil futures closed Friday at 51.43 cents/lb, nearly 10% below recent highs, pressured by spreading and the SRE headlines. Soymeal firmed instead on Chinese soy import demand, with July arrivals at 11.66 million tonnes, the highest for that month since 2012. USDA projects global soymeal trade to reach 82 million tonnes in 2025/26, another record year led by Argentina at 30.1 Mt and Brazil at 23.2 Mt. More soymeal, means more Soyoil. Meanwhile, D4 RINs staged a sharp bounce on Friday, settling at $1.20, a move read by many as positioning for the possibility that a wave of SRE approvals would tighten compliance credit supply. Tallow prices also remained firm, with the U.S. absorbing 73% of world tallow exports in Q2.

D4 RINs

The RINs Paradox: Friday’s bounce in D4s was widely interpreted as a sign that compliance obligations are now concentrating on the non-exempted refiners, boosting short-term demand for credits. But the broader arithmetic tells a different story. With more than 200 exemptions granted since 2013 — including 85 in just three years that waived over 38 billion gallons of fuel — the total pool of obligated gallons has been cut dramatically. In theory, that reduces aggregate RIN demand over time, even if the burden on the remaining obligated parties is heavier. The result is a market caught between short-term tightness and a long-term risk of structural devaluation if exemptions remain at scale.

Asian markets opened the week softer in vegoils, extending Friday’s bearish tone from Europe and the U.S. Palm oil, soyoil, and rapeseed oil futures all eased, though the structure of palm oil remains technically supportive. The most active November CPO contract held above MYR 4,500/t, with support around MYR 4,250 and resistance at MYR 4,600. MPOA data showed August production up 3% m/m, while ITS and Amspec pegged exports up 13–17% y/y. Indonesia shipped 2.48 Mt in July, slightly below June, but India’s vegoil import needs are projected to climb to 18 Mt in 2025/26, including 9.4 Mt palm oil, ensuring demand pull remains intact.

Taken together, the global biodiesel complex faces a tug-of-war: strong physical demand in Asia, resilient protein trade in soymeal, and a U.S. policy shock that could recalibrate RIN values and blending economics overnight. Friday’s bounce in D4s may be an early signal of stress as compliance expectations shift. With only 38 eligible refineries but 462 petitions filed and 140 exemptions just granted in this latest round, the gap has become impossible to ignore. Against this backdrop, next-gen fuels remain structurally tight: HVO Class 4 was indicated around $2,262.63/t CIF NWE, while SAF continues to command a premium at $2,280.24/t. The result is a market primed for volatility as Europe, the U.S., and Asia all adjust positioning to a regulatory backdrop as decisive as any crop forecast.