Margins Still Exist in Europe, But Structure Is Breaking Everywhere Else

Flat price support has now broken across the core inputs that anchor biodiesel economics. Both ICE gasoil and CBOT soybean oil have confirmed downside trend damage, with the 20 day weighted moving average now at least $20 per metric ton below the 50 day weighted moving average in each market. This marks a clear shift in momentum after repeated failed recovery attempts and signals that the market is no longer stabilizing.

ICE gasoil continues to slide along the curve. Front months managed a small bounce, yet the broader structure remains weak and the back end continues to soften. Weekly charts show prices capped below declining medium and long term averages, reinforcing that the market is pricing normalization rather than tightness. The continued erosion in backwardation points toward softer distillate fundamentals rather than a temporary dislocation.

Soybean oil follows the same technical path. Front months remain stuck in the high 40s to low 50s cents per pound, with every rally stalling below the falling 50 day average. The contango through mid 2026 remains intact and signals comfortable supply. This aligns with cooperative South American weather, lagging U.S. export pace, and the absence of meaningful policy support.

Rapeseed oil has now fully adjusted with the rest of the complex. FOB Rotterdam values have fallen roughly 15 to 20 euros per metric ton across nearby and mid curve positions over the past week. January 2026 RSO is best referenced around 1050 euros per metric ton, with February through summer strips marked lower as well. RSO is no longer insulated and is repricing alongside gasoil and soft oils.

The ARAG window confirmed why producers were willing sellers. RME traded at 1463.50 dollars per metric ton, with heavy producer selling evident. Using January RSO at 1050 euros per metric ton and a euro dollar rate of 1.17870, the gross margin works out to roughly 225 dollars per metric ton. At those economics, selling into the window made sense. Margins remain healthy despite the recent pullback in feedstocks, and the supply response reflects rational profit capture rather than stress.

On the U.S. regulatory front, an important structural change is underway. The sunset of NOx mitigation requirements clears the way for higher biodiesel blends in California markets. In practice, higher blends were already occurring, supported by cetane additives to manage emissions. The rule change validates that behavior and reduces friction for biodiesel demand, while turning bearish for NOx and cetane additives as a standalone value driver.

Despite that regulatory improvement, U.S. biodiesel economics remain challenged. D4 RINs have firmed modestly, with December 2026 trading around 1.119 dollars per RIN, yet the implied biodiesel crush screen still sits near negative 37 cents per gallon. The forward curve offers no relief, with margins widening toward negative 51 cents per gallon by July. This is not a spot issue, it is a forward signal that conventional biodiesel production remains underwater.

Asian diesel markets add further context to the global softness. Liquidity remains thin, January February gasoil spreads are largely unchanged, and Singapore cash differentials have stabilized near 23 cents per barrel. Refining margins have eased toward 18.8 dollars per barrel, and the absence of spot window activity reinforces the view that demand remains cautious rather than tight. The Asia to U.S. West Coast jet fuel arbitrage remains open, yet volumes remain limited during the holiday period.

The message across regions is consistent. Europe still offers margins, which explains producer selling, while the U.S. remains constrained by policy and forward economics. With gasoil, soybean oil, and rapeseed oil all having lost technical support, curves are confirming the move. Until energy stabilizes or U.S. policy delivers clear guidance, rallies should be treated as corrective rather than directional.