Rapeseed Oil Breaks Higher as Gasoil Rallies and BOGO Narrows

Global biodiesel markets opened the week with notable shifts in price spreads and product fundamentals, most visibly through a sharp contraction in the BOGO (bean oil-gasoil) spread, which has dropped to +418 $/t—one full standard deviation below recent averages. This move reflects gasoil’s 2% rally to $634/mt, tightening crush margins for biodiesel despite nominal firmness in feedstock values. While bean oil futures remain under pressure from broader vegoil weakness, they are still struggling to find support amidst heavier South American exports and a sluggish macro backdrop.

BOGO

In Europe, the real pressure point is now rapeseed oil, which has surged past soyoil and is trading at €1,100/mt, a development that flips traditional feedstock economics on their head. The inversion—rapeseed oil at a premium to soyoil—has made RME margins uncomfortably thin. Spot RME barge values were quoted around $1,335/mt today, yielding a gross margin of just $63/mt when adjusted for a stronger euro at 1.156. This narrow spread underscores the market’s inability to pass through rising feedstock costs in full to finished biodiesel products.

Meanwhile, activity in the FAME and UCOME space is diverging. FAME saw little liquidity in today's ARA barge window, while UCOME was the most traded, closing at $1,455/mt. Yet even with stronger demand, the gross replacement margin for UCOME was just $182/mt—a relatively tight spread considering the volatility in feedstock markets and increased freight risk from Southeast Asia. The combination of high costs and thin margins is keeping discretionary blending decisions on edge, especially under current FX and credit conditions.

Asian vegoil markets added to bearish sentiment, as palm oil prices continued to slump due to rising Malaysian output and a stronger ringgit. July CPO futures on Bursa Malaysia fell to 3,911 ringgit/mt, a 7-month low, while palm olein FOB offers from Indonesia softened to the $975–985/mt range for May cargoes. At the same time, China’s rapeseed oil imports jumped to 340,000 tonnes in March, partly front-loading ahead of tariffs on Canadian-origin volumes. Adding to the muted tone, physical trading in Asia is expected to be subdued this week as many traders head to Singapore for the Argus Biofuels conference, which begins Tuesday and draws top participants across the biodiesel and SAF value chains.

Beyond pricing, geopolitical trade developments could soon disrupt biofuel logistics. The U.S. Trade Representative’s new Section 301 proposal introduces steep port-call tariffs—up to $50/nt—on Chinese-owned or operated vessels. These fees would significantly raise the cost of importing used cooking oil (UCO), tallow, and palm oil derivatives shipped in bulk from Asia to the U.S. They could also impact outbound flows of U.S.-produced biodiesel, renewable diesel, and ethanol, particularly to Asia. If Chinese tankers reroute, the market may experience regional freight bottlenecks and vessel overcapacity in alternative markets, especially in Europe or Latin America. The consequences could reverberate through global arbitrage structures and introduce new volatility to CIF-based pricing.