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Gasoil structure weakness weighing on Biodiesel markets

Jun/Dec gasoil structure is down 84% in last 3 months while flat price is down nearly 10%. Biodiesel flat price for FAME is now $1253/mt as cash premiums compensating for expected gasoil weakness and to protect transformation margins. Gross margins for Biodiesel producer are still reflecting $250/mt basis Soyoil and $100/mt less for RME. These record margins clearly supporting Biodiesel production considering supply side of soft oil this year especially post-winter Sunflower oil now flowing into Dutch mill market from Ukraine/Romania etc... Would expect SFO to become competitive with bean oil soon as many active shipments on the way - SFO remains an unsustainable $120/mt premium to SBO which is simply too much and would expect SFO to be cheapest soft oil in Northwest Europe sometimes this summer. This will drag down all flat prices for softoil in Europe with RSO remaining relative stronger at least through Oct as Biodiesel industry builds winter stocks. EU Biodiesel sector still awaiting decision on UCOME countervailing duty from China by Jul 1 which has nearly frozen all shipping of such product into Europe making even more China UCO available for US for now. Remind all that China building 4.5 Mil MT of HVO/SAF assets coming on line starting in 2025. Flat price of UCOME in Rotterdam reached $1335, still not nearly as high as what we experienced in early April. Gross margin for European UCOME biodiesel producer still quite healthy basis current prices at $236/mt but yields are not similar as FAME. Meanwhile in US, lots of rumors on possible political action on China UCO as crushers continuing to panic over declining mix of Soyoil in Biodiesel/RD mix despite record production levels. RINs weaker.

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