Markets Rattle as Trump Targets China on Rare Earths

Markets reeled today after Donald Trump’s morning post accused China of “hostile behavior,” threatened a “massive increase” in tariffs, and canceled his meeting with Xi Jinping slated for South Korea. The announcement sent shockwaves through global markets, with ICE gasoil tumbling a full standard deviation to $647.75/mt and soybean oil down roughly half that amount as traders pared risk across commodities and tech.

Despite the turmoil, expiry dynamics of ICE gasoil kept October gasoil settling +$22 over November, though the Nov/Apr backwardation eased to +$32/mt—indicating reduced forward tightness. Gold jumped back above $4,000/oz, and the U.S. dollar’s renewed strength further weighed on vegetable oil and biodiesel spreads.

Northwest Europe ARAG window trade was nevertheless active heading into the weekend. RME traded at $1,402/mt and UCOME at $1,482/mt, narrowing the UCOME/RME spread to $80/mt. FAME 0 traded at $1,403/mt, while the UCOME/F0 spread widened sharply to $163.50/mt. HVO Class 2 slipped to $2,592/mt, while SAF remained firm above $2,700/mt.

On the spreads, December BOGO printed at +$464/mt, reflecting soybean oil’s relative resilience against the sharp gasoil drop. BOPO, however, continued to weaken and now appears headed into negative territory—a pattern last seen in Q4 2024. Palm oil’s firmness, bolstered by B50 speculation and steady Indian import demand, is eroding the traditional bean-oil premium and could soon flip the relationship entirely if energy markets remain under pressure. This shift underscores tightening margins across the biodiesel complex and signals growing structural support for palm in the feedstock stack.

The U.S. biodiesel sector remains under heavy strain. D4 RINs eased to $1.03, implying producer margins near –50¢/gal. Feedstocks were mixed: CPO extended its rally on Indonesian policy signals, while CME soyoil lost nearly 2% under falling crude and a surging dollar.

The market’s real blind spot may be logistics. China’s retaliatory port fees—starting October 14 at 400 yuan/mt and rising to 1,120 yuan/mt ($157) by 2028—target U.S.-linked ships, including those owned or operated by firms with U.S. shareholders. That definition sweeps in global grain and oilseed majors as well as LNG carriers supplying China, effectively raising voyage costs for key exporters of soy, corn, and gas. With freight already elevated across most routes, this additional levy threatens to compound cost pressure on traded commodities and distort normal flow patterns just as year-end agricultural shipments peak.

Adding to the uncertainty, Washington is set to activate its own round of import tariffs late Sunday night, aimed at a wide range of Chinese industrial and tech goods. The reciprocal escalation is expected to ripple through markets as early as Monday’s Asian open, setting the stage for an exceptionally volatile week across energy, freight, and agricultural commodities.

With logistics, energy, and policy all colliding, today’s trading underscored how fragile sentiment has become—and how the balance between bean oil and palm oil could soon mark the next stress point in a rapidly escalating trade and energy standoff. All eyes now turn to whether BOPO turns negative next week, a potential trigger for feedstock re-pricing across Europe and Asia as biodiesel producers reassess competitiveness along the vegoil chain.