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Gasoil Backwardation breaking down in NWEurope and Biodiesel follows

Nov/Apr backwardation that was near $100/MT last week has now broken down to +$78.5. We can also see that premiums for Biodiesel are now showing a contango of nearly -$39 to Q2 if not more while flat price backwardation is now only +61/mt. This is not happening with winter Biodiesel which remains still heavily backward or inverted showing on a flat price basis +$127 to Q2 and +$185/mt to Q3. These are large numbers. Production Margin remains healthy for RME. So only way to explain this heavy backwardation must be 1/lack of coverage by refiners and 2/low water levels still hampering logistics. We do note large imports last month of HVO into Spain so we can only explain this by last minute Q4 blending to meet the mandate. Certainly the inverse in RSO to Q1 of +$68/mt pales in comparison to the flat price +$127 of the RME. US Soy harvest has now achieved 62%, well ahead of last year but I do note that the most expensive soft oil in Europe is Soyoil which is $250/mt above Sunflower oil. In fact Sunflower oil pricing is equivalent to Palm oil. This is clearly unsustainable.

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