Rally Fatigue Into a Thin, Geopolitical Weekend

Bean oil attempted another push higher but failed again near 57.75 and settled just under 57 cents per lb. The rejection at the highs coincided with visible selling of at-the-money March calls around the 57.00 to 58.00 strikes. Rather than chasing upside, the market was comfortable selling it. That shift in tone signals distribution and volatility harvesting rather than breakout positioning.

Spreads confirmed the softer bias. BOPO fell double digits on the day but still higher for the week while BOGO eased. Bean oil as a percentage of gasoil slipped. U.S. screen biodiesel margins remain negative at minus single digits in March and more than minus 20 cents per gallon from April onward, even with D4 RINs holding 1.50. Forward economics still do not justify sustained feedstock strength without additional policy support - my feeling is a new BTC will be put back on table soon.

South America remains heavy. Argentine soyoil basis was assessed around a 5 cent per lb discount to March futures and Brazil near a mid-4 cent discount. Paranaguá FOB premiums, which had been bid near minus 1000, are stabilizing modestly. The bounce appears driven by softer CBOT futures rather than tightening supply. As flat price expectations ease, basis firms mechanically as exporters defend netbacks.

Palm oil continues to lean lower with CPO recently trading near three-week lows, weighed by a firmer ringgit and weaker related oils. Early February Malaysian export data showed a mid-teens month-on-month decline. The palm complex is not offering upside leadership.

Europe presents a different structural picture. From July 1 to February 1, the EU imported 1.04 million tonnes of sunflower oil, of which 0.95 million tonnes originated in Ukraine, representing a 92 percent market share. Competing origins account for only marginal volumes. At the same time, Ukraine’s sunflower seed harvest declined from 13.0 million tonnes last year to 10.5 million tonnes this season. With limited alternative suppliers, NWE edible oil values are structurally supported by concentration risk.

The geopolitical backdrop is intensifying. The EU has proposed extending sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil. Targeting third-country ports raises compliance risk and increases uncertainty across Black Sea and related trade corridors.

Against that backdrop, HVO Class II in the window adjusted another 61.25 dollars higher to 2,606 per tonne. That magnitude of move highlights how sensitive renewable diesel values remain to distillate structure, compliance markets and geopolitical risk. Renewable product pricing is not moving in lockstep with soy fundamentals.

We now head into another geopolitical weekend with U.S. markets closed Monday for President’s Day and Lunar New Year celebrations reducing liquidity across Asia next week. Thinner participation amplifies headline risk. With upside in bean oil being sold, crush margins negative, HVO volatile and sanctions risk rising, the complex is balanced between soft global soy fundamentals and firm European edible oil structure.

The next directional move is likely to be policy driven rather than crop driven.