Rapeseed Recovery and Soft Oil Parity Mark a Turning Point in European Feedstock Markets

Markets opened the week with a significant update from the EU, which raised its 2025 rapeseed production forecast by 2.5 million tonnes. This follows improved planted area and expectations for yield recovery, particularly in Romania and the Baltics. Yet despite the production boost, old-crop stocks remain depleted, and 2025/26 imports are forecast to stay elevated at 6.6 million tonnes, with Ukraine, Australia, and Canada each supplying substantial volumes.

In European physical markets, soybean oil and rapeseed oil have converged in price, trading at parity in the three ports market at €1,080/mt for June and €1,070/mt for July. This suggests a shift in relative value between the soft oils, potentially resetting feedstock competition across biodiesel formulations. Meanwhile, ICE Gasoil remains under pressure from a lack of directional news, and the Jun/Sep backwardation has narrowed by 7% to +$9/mt, indicating waning demand expectations for distillate fuels.

BOGO moved up slightly to +477 as bean oil firmed to 49.32 c/lbs, but margins remain compressed. ARAG F0 barges traded at $1,287/mt, leaving a gross replacement margin of only $71/mt at an FX of 1.127. In contrast, UCOME saw a burst of activity on the Argus window, likely from short covering, settling at $1,381/mt and delivering a more attractive $220/mt margin using spot UCO inputs.

Notably, the backwardation in paper premiums for F0 has eased relative to prior weeks, now showing +45 for nearby contracts. This is more in line with the gasoil curve and reflects a subtle normalization of forward expectations. The $10/mt RME premium to F0 is modest, while the significant interest in UCOME—with its wider margin—indicates the market's appetite for high-GHG-saving waste-based fuels, especially amid tightening regulatory scrutiny.

In the U.S., RINs traded steadily at 1.09, but the market remains tense. With screen crush margins stuck at -45 c/gal and political uncertainty mounting, the upcoming decisions on both the RVO update and the so-called “big beautiful bill” could be game-changers. If the RVOs are raised without broader fiscal clarity, markets may face major dislocations in biofuel economics, especially as refiners push back against any increase in compliance costs.