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Insane backwardation in US Bean oil while SouthAmerican premiums making new lows

Updated: Aug 17, 2023


Paranagua Soybean oil for Sep is offered at -2500 showing an enormous contango in South America premiums while US Soyoil backwardation of Sep/Dec is up 1396% in the last 3 months at +3.96. yes you are reading it right. Dec23 to Dec 24 backwardation is up 612% at 6.11. Now of course this reflects the fact that soybean oil is reflecting a substitution effect with diesel in the US because of Renewable Diesel. Diesel is showing $50/mt backwardation to sep/dec while dec23/dec24 is showing $95/mt. What is interesting is that you are not seeing this reflected in crush margin for Soybeans which are pretty much flat. Wouldn't you imagine that such Soybean oil backwardation be reflected in soybean crush margins? Dec23/Dec24 spread is flat. My feeling is that this perhaps reflects that we have a very serious shortage of distillates(Diesel/jet). Prepare for much higher flat prices on Gasoil/Heating oil and Soyoil.

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