Post-Holiday Pause or Calm Before the Storm?

Markets returned from the U.S. Memorial Day holiday into a relatively quiet landscape, with European activity also subdued due to a midweek religious holiday. Yet under the surface, pressure is building. EPA Administrator Lee Zeldin missed his own deadline for announcing the 2026 Renewable Volume Obligations (RVOs), and the D4 RIN market continues to hold at $1.09, reflecting a lack of regulatory direction.

European biodiesel markets remain weak. UCOME is steady around $1,399/mt fob ARA, while Fame 0 has slipped to $1,276/mt. RME is also drifting lower. Hydrotreated fuels remain elevated, with HVO Class II quoted at $1,916/mt and SAF (HEFA-SPK) near $1,802/mt—highlighting how mandate-driven demand continues to sustain premium pricing, especially in aviation fuels.

Ukraine has solidified its role as Europe’s primary agri-supplier. Over 90% of EU sunflower oil imports now originate from Ukraine, with similar trends emerging in grains and meats. This has helped stabilize short-term supply, but at the cost of weakening European agricultural competitiveness. With the EU now entering trade talks with the United States, this growing reliance on Ukrainian commodities has become a strategic concern.

Sunflower oil is now effectively the price setter for Europe’s entire soft oil complex. Its dominance in household consumption and abundant supply have placed downward pressure on rapeseed, soybean, and palm oil markets. While lower feedstock costs may seem like a win for biodiesel producers, dependence on a single source poses long-term risks—especially in a sector so closely tied to geopolitical and logistical dynamics.

Meanwhile, palm oil markets are showing contradictory signals. Indonesia has raised its export levy to finance domestic biodiesel blending, and Malaysian exports rose over 10% in May. Yet prices remain subdued, with August CPO futures around $910/mt and olein offers flat near $960/mt. Global demand remains tepid, and U.S. buyers are absent due to 45Z ineligibility for palm-based fuels—limiting the upside for Southeast Asian producers.

With regulatory uncertainty in Washington and structural dependency building in Europe, biofuels markets are at an inflection point. The calm may not last. Traders should prepare for a policy-driven jolt from either side of the Atlantic.