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Massive improvements in Biodiesel margins while FAME premiums falling


Houston we now have a problem with demand as consumer watches prices falling yet backwardation in both Gasoil and Bean oil remain but for how long? Heat crack is $60/brl and we traded over $1000 per mt this week on gasoil only to fall back $44/mt to $956. Yet, spot BOGO is +400 yet FAME spot premiums struggle at +364 over ICE Gasoil or nearly $35/MT below to find bids. We see Rapeseed Methyl Esters producers hitting any bids that shows up as Rapeseed oil remains nearly 150Euro/MT below soy oil in Northwest Europe and biodiesel producer margins yield >$200/ Metric Tons against spot prices. Even Sunflower oil is less expensive than Bean oil. Would appear that combination of a monster oilseed crop in Brazil and any further drop in demand will push the pendulum way past equilibrium to erode backwardation and attract demand. Lets see what post-CNY activity brings up from China.


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