RINs at 1.50, Negative Crush, and Paranaguá Premiums Near Minus 1000

D4 RINs traded at 1.502 for Dec26, up 1.62 percent, yet the March biodiesel screen crush moved further negative to minus 9 cents per gallon. That divergence defines the current market. Your screen crush excludes LCFS and 45Z, but even when you layer those in, the uplift is limited relative to the old BTC structure.

LCFS adds roughly 20 cents per gallon on qualifying volumes. 45Z scales with CI. At 35 CI and assuming qualification for the 1.00 rate, the credit is about 26 cents per gallon. At 40 CI it falls to roughly 15 to 16 cents. Most Midwest soy pathways were historically near 50 CI. Even if updated GREET assumptions compress those into the 40 area, 45Z remains structurally modest for average soy based plants. Only low CI pathways such as UCO heavy operations capture meaningful value.

This matters for RIN formation. At minus 9 cents per gallon on screen, and only 15 to 16 cents of 45Z at 40 CI, the system still relies heavily on RIN value to restore margin. In a purely economic clearing framework, D4s would need to rise further to fully incentivize average soy production.

The fact that RINs stall around 1.50 reflects political sensitivity rather than physical balance.

Without government intervention risk in the background, RINs would likely trade materially higher to compensate for negative crush economics. The market is operating within a policy corridor.

On the petroleum side, ICE gasoil expired at plus 14.75 over March versus plus 3 previously, signaling prompt tightness. However, Mar Jul backwardation eroded to plus 27, showing reduced tightness further out the curve. Brent Apr26 fell 2.97 percent to 67.34. WTI Mar26 declined 2.97 percent to 62.71. Heating oil futures dropped roughly 2.6 to 2.8 percent across the strip. The structure is firm nearby but less constructive forward.

In ARAG, the physical complex softened. RME traded down 20 dollars per metric ton to 1370 flat price. FAME0 fell 16 to 1305. UCOME settled down 18 to 1414. HVO Class II saw no trades but was assessed down 78 to 2545. SAF held near 2059. The magnitude of the HVO2 adjustment stands out against only modest moves elsewhere.

European paper volumes slowed after a heavy Week 5, confirming reduced follow through in outright positioning.

The key feedstock signal is Brazil. FOB Paranaguá soybean oil premiums are approaching the minus 1000 levels as anticipated. Domestic basis in Mato Grosso and Goiás remains negative near minus 5 to minus 8 cents per pound. Crush capacity has expanded while biodiesel mandates have not kept pace, and logistical backlogs persist. Export remains the clearing mechanism. This weak premium environment caps global flat price enthusiasm.

CBOT bean oil sits near 56.9 cents per pound for March, around 1,255 dollars per metric ton. With Brazilian premiums collapsing and export flows incentivized, feedstock availability does not point to scarcity.

State level SAF policy continues to move unevenly, reinforcing that federal 45Z structure and CI treatment remain central to capital allocation decisions.

The picture is consistent. RINs at 1.50 reflect regulatory tension. The screen crush at minus 9 cents per gallon reflects soy margin pressure. LCFS and realistic 45Z values cushion but do not recreate the former BTC economics for average 40 CI Midwest plants. Meanwhile, collapsing Paranaguá premiums and eroding gasoil backwardation suggest no physical shortage.

Absent the political ceiling, D4s would likely need to trade higher to clear the economics. Markets are pricing policy, not tight molecules.