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How Will the Resumption of ULSD Contango to Sep Impact Biodiesel Premiums?

Contango to Sep (driving season) is now back to -$6/mt while Sep/Dec is backwarded by $8.25/mt which is a rather complex structure to trade this summer. The ICE gasoil Jun/Sep is down 141% while Sep/Dec is down 51% consistent with that market is telling us that nearby demand may not be as strong and supplies remain plentiful despite lower heat crack. Spot biodiesel prices in Northwest Europe now reaching higher levels nearing early Apr when gasoil was $100/mt stronger. This time it is premium that are keeping prices well supported but still some difficulty yet we are trading FAME 0 at $185/mt premium to BOGO. Gross margin on Biodiesel remain healthy and ready to support demand but the weak link here is gasoil .. not biodiesel. Bean oil as a coefficient of Gasoil is strong at 1.73 which means we will see additional pressure on bean oil. Still think that chart on gasoil is ugly!

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