
The spread between rapeseed oil and soyoil is reaching a low of +20 Euro/mt in northwest Europe as the winter biodiesel season ends, although the spot physical market structure remains backwarded through May for both soyoil (+45 Euro/mt) and rapeseed oil (+10 Euro/mt). Additionally, the ICG is now reporting an expectation of additional acreage worldwide, taking the area planted with rapeseed up by +1.4% to 44.1 million hectares—a record. The expansion of rapeseed area in the US is particularly noted at +8.3%, while Europe is expanding rapeseed area by +4%. Most of this expansion is related to the EPA approving canola oil in addition to rapeseed oil as an approved pathway in 2022. It is also apparent that US imports of canola oil have expanded significantly in addition to its expanding domestic production. Should you add the picture on rapeseed oil to the South America crop of soybeans, we are looking at a decidedly heavy oilseeds picture for the second half of 2025 while most biofuels markets like the US and Europe are lowering their subsidies or mandates for crop-based oils. Although UCO prices have been stable in Europe at $1155/mt, we note that tallow cat 3 prices have moved higher by $35/mt to $1035/mt. Record tallow exports from Australia in the period of Jan 24-Nov 24 of 517 kt are keeping prices well supported as flows to Singapore amounted to 53.2% and the US 37.6%, in line with expectations of a strong Q4 production season motivated by the desire to maximize the Biodiesel Tax Credit in 2024. There is no BTC in 2025 as it is being replaced with 45Z, which is only applicable to US plants. Foreign registered plants now only qualify for RINs generation, which at the current market value for D4 RINs is 0.74 c/gal, still is a significant motivation to produce for US markets. The spot RME gross margin in ARAG today is a bit lower at $112/mt, while SAF spot values are $1844/mt, reflecting a gross margin of $504/mt based on UCO. Note that transformation costs for SAF are much higher than for HVO or standard esterification.

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