Deep Discounts and Dollar Weakness Set the Stage for a Repricing

Markets opened quietly this week with Easter Monday and the Pope's passing (RIP) keeping most of Europe offline, but signals from energy and feedstock markets are anything but muted. ICE gasoil dropped over 2% to $619/mt, and the U.S. Dollar Index (DXY) broke below 98 for the first time since early 2022 — a move that could ripple through global trade flows. While physical biodiesel activity is stalled, these macro shifts are creating the potential for repricing across the biodiesel complex in the coming days.

Brazilian soyoil FOB premiums at Paranagua continued their decline. Jun/Jul is now offered at –280 points under futures, with Aug/Sep falling to –330. This collapse reflects crushers prioritizing soymeal flows over oil margins, offering aggressively to move inventory before corn exports tighten logistics in June. What’s striking is that these weaker basis values come even as CBOT soyoil futures hold steady — a clear sign of local oversupply and sluggish global offtake. For importers buying in dollars, the weak USD only amplifies the bargain, but the fundamentals remain heavy.

Palm oil is regaining relative competitiveness, with Malaysian RBD olein now priced well below soft oils. India has returned to the market, and Southeast Asia is expected to ramp up blending. In Europe, demand remains stalled, but quota values and a stronger euro could tip the scales quickly. Rapeseed and sunflower oil supplies remain tight, especially into summer, but without a clear pickup in physical blending, price signals continue to feel disconnected from policy obligations.

Meanwhile, UFOP continues to spotlight the massive inflows of Ukrainian agricultural products into Europe — not just grains and oilseeds, but also poultry, pork, and eggs. These zero-duty imports are keeping food inflation in check, but at the cost of sustained pressure on domestic EU producers. Rapeseed oil is still trading under €1,000/mt, and Germany’s biodiesel blending remains deeply below mandate levels. In a market where blending economics are driven less by margin and more by CO₂ arbitrage, demand won’t return until quota values recover.

While both BOGO and BOPO are widening — the latter reaching +160 for July — the context matters: these spreads are rising for the wrong reasons. Gasoil is weakening, not feedstocks strengthening. D4 RINs may be holding at $1.057, but May biodiesel screen margins are firmly negative at –37 c/gal, slipping further to –46 c/gal by July. Paranagua premiums continue to fall, ignoring BOPO logic because CBOT soyoil futures are too strong. Meanwhile, heat cracks remain strong at $25.70/bbl, implying that refiners can continue to push diesel prices lower. The result? A market where the optics suggest a spread opening — but in reality, it's a mirage. The path to recovery will require more than a weaker dollar and wider spreads. It will take real global demand.