FAME Premium Surges as BOGO Breaks Out – Futures Diverge from Physical Reality

European biodiesel markets showed renewed strength today, with FAME 0 premiums rising to +635/mt over ICE gasoil, their highest in recent weeks. This move tightened the RME/FAME spread to just $22/mt — the narrowest since July 11. RME was assessed at $657/mt, while UCOME remained firm near $745/mt. While UCOME continues to lead with a gross margin of $200/mt, RME margins remain healthy at $139/mt, especially compared to FAME 0, where economics are marginal. Contango in the BOGO curve supports storage economics, particularly for F0 heading into winter.

Physical FOB barge liquidity in ARA has been resilient but selective, with firm bid levels and sellers willing to engage at higher premiums. However, in the forward market, August FAME 0 traded on screen at $595–608/mt — well below physical — signaling dislocation and lack of delivery appetite. ICE gasoil remains backwardated, with Aug/Dec at $50/mt, limiting hedge effectiveness for physical longs.

August BOGO surged to $543.35/mt, a full standard deviation move higher. The curve shows clear contango, with structure offering $20–25/mt out to December — incentivizing deferred sales or inventory buildup. This is in stark contrast to rapeseed oil, where the physical forward curve remains flat, reflecting a tighter spot-to-forward balance and fewer arbitrage opportunities for RME production. While Brazilian soyoil FOB basis continues to weaken — now -500 to -550 for September and -580 to -680 for OND — U.S. soyoil futures remain firm due to domestic policy support under 45Z.

BOGO

Palm oil markets are highly active, balancing robust exports with emerging constraints. Malaysian MPOA reported an 11.24% m/m increase in July 1–20 production, while Indonesian May stocks dropped only to 2.916 million tons despite record exports. GAPKI sees 2025 exports falling by 5% as domestic biodiesel use expands. However, Indonesia’s ambitious blending plans face infrastructure bottlenecks and certified feedstock shortfalls. In the spot market, China booked August CPO at $1,060–1,062/t CFR, and India paid $1,130 CFR WCI for September. On the policy front, Malaysia has successfully negotiated a 15% U.S. tariff , while Indonesia remains subject to a 19% rate, creating a two-tier competitive landscape for potential biodiesel feedstock or finished Bio/HVO exports to US.

Cash vegoil prices were firm today. Dutch soyoil for Sep–Oct stood at $1,145/mt FOB, rapeseed oil offers at €1,048/mt were flat across the curve, and sunflower oil remained supported at $1,250/mt FOB Northern Europe.

Confidence in U.S. biofuel policy continues to erode. The DOE’s 45Z Emissions Value Request Process is open for public comment through September 22, following the still-pending RVO proposal (comment deadline August 8). These drawn-out timelines — combined with the EPA’s planned 20% staffing cut and delayed PERs — are creating uncertainty. Until regulatory clarity is restored, capital deployment and hedging decisions will remain cautious and selectively defensive.