Diesel Pauses, BOGO Points Lower
The first post-Labor Day session looks like consolidation rather than a change in the energy trend. September ICE gasoil is around $1,434/mt, November Brent near $97/bbl and WTI around $92/bbl, while the heat crack remains close to $99/bbl. Sep/Dec gasoil backwardation is still around $206/mt and Sep/Jan near $250/mt. Hormuz and the Gulf of Aden have not materially improved, while reported attacks have now reached Saudi refining and product infrastructure around Jazan and Abha. The important number for biofuels is BOGO, now around $113/mt after trading near $650-$700/mt earlier this summer. Diesel is pausing, but the structure still says prompt product is scarce.
Northwest Europe remains expensive and physically constrained. September RME is indicated around $1,818-$1,838/mt, FAME0 around $1,718-$1,738, UCOME around $1,833-$1,853 and HVO around $2,813-$2,833, against gasoil around $1,430/mt. Week 35 paper activity reached about 218,500 tonnes in RME, 121,000 tonnes in FAME0, 136,300 tonnes in UCOME and 241,500 tonnes in HVO2. Kaub is back near 30 cm, 47 cm below GlW, with ARA-Basel freight around €142/mt and a 100% probability of remaining below GlW through September 21. German rapeseed oil exports also fell 14.4% in 2025/26 to 1.11 million tonnes. These numbers keep European biodiesel values supported even while gasoil takes a breather.
The U.S. has a different soybean-oil problem. National diesel is around $5.90/gal and Arizona near $5.98, while December D4 RIN futures are around $2.20. October soybean oil is near 70.18¢/lb, equivalent to roughly $1,547/mt, yet nearby structure remains weak, with Sep/Dec around minus 1.70¢ and Sep/Jan near minus 1.93¢. Managed money holds roughly 1.03 million contracts net long across U.S. grains and oilseeds, while farmers are beginning to sell into those positions as harvest approaches. The RFS should keep Chicago soybean oil structurally firmer than international values, creating an increasingly visible U.S. island effect rather than forcing Chicago to converge fully with the world market.
Asia makes that divergence easier to see. November CFR West Coast India soybean-oil swaps are bid around $1,300/mt versus roughly $1,350/mt for CPO, putting soybean oil about $50/mt below palm at destination while Chicago sits near $1,547/mt equivalent. This is not a direct physical arbitrage comparison, but the roughly $247/mt gap shows how large the U.S. premium has become. China imported 12.14 million tonnes of soybeans in August, down 1.1% year on year, while some crushers are considering lower throughput because of poor margins and a tighter forward pipeline. Brazil FOB Paranaguá soybean-oil basis was around minus 1,280 to minus 1,400 points in early September, equivalent to roughly minus 1.28 to minus 1.4 ¢/lb, which already shows the international market discounting Chicago heavily.
My view is now bearish soybean oil relative to diesel, even if the RFS keeps Chicago elevated. I expect South American basis to do more of the adjustment, with Paranaguá moving from roughly minus 1,300 to minus 1,500 points toward minus 2,000 points, or about minus 2¢/lb, if CBOT remains near 70¢ and importers continue resisting the flat price. BOGO therefore has more downside than a simple retest of the recent lows. At today’s $1,434/mt gasoil, soybean oil only needs to fall from 70.18¢ to about 65.0¢/lb for BOGO to reach zero. If gasoil rebounds by $50/mt, zero BOGO requires soybean oil of only about 67.3¢/lb - most likely scenario. The weekly chart has traded below zero before, so with record agricultural length meeting harvest selling and diesel still deeply backwardated, I now see zero as the next major BOGO test, with negative territory increasingly plausible beyond it on any disappointing soyoil usage for Bio in the US.
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