Spreads, Not Flat Price, Drive the Market as BOPO Climbs Above +140

Gasoil finally asserted itself today, rallying close to 3% and pulling BOGO sharply lower as biodiesel values simply could not keep pace with the surge in distillates. The most striking feature of the day was soybean oil’s complete lack of participation. Bean oil ended essentially unchanged even as gasoil surged, reinforcing the December pattern: energy remains tight and occasionally explosive, while vegoils stay fundamentally heavy. BOPO continues drifting higher — now well above +140 for Mar — driven almost entirely by ongoing weakness in palm oil. At this same point last year, BOPO stood near –200, even though soybean oil traded close to today’s levels. The difference was palm, then valued around $1,130/mt. Today, palm struggles to clear above the low $1,000s, and rising stocks across producing regions continue to weigh on the entire vegetable-oil complex.

Even with more soybean oil, more palm oil, and more export availability than last year, relative pricing appears firmer only because palm is the weakest leg and forces the rest of the complex lower until it clears. Chicago bean oil continues to trade in a narrow domestic RFS-driven band, finding support below 50 cts/lb but unable to sustain values above the low 53s. This behavior is disconnected from global fundamentals. Palm remains the gravitational center of the vegoil landscape and correlates closest with waste oils, which is why BOPO rises despite a flat soybean-oil market.

South America is once again the real pricing engine, and the forward structure in Brazil sends the clearest signal. While Argentine offers hold steady due to limited availability, Brazil sets the global clearing level. Market discussions today centered on the new-crop Apr/May Brazilian soyoil window, which remains deeply discounted at –520 to –590. This is the period that matters because it defines the global marginal price for Q2. Crushers in Brazil continue to run hard on abundant beans and strong meal demand, and the oil produced must clear export channels at these sharply negative differentials. With expectations now that Brazil will postpone the move to B16 next March, the domestic absorption that crushers hoped for will not materialize. The result is that the export market must carry the entire burden, and the depth of the Apr/May range quantifies the oversupply more clearly than anything else in the market today.

China remains the key uncertainty in U.S. soybean flows. Traders again emphasized how far China lags behind typical seasonal patterns. By late October, China would normally have secured well over 50% of its annual U.S. program, yet this year it represents only a small fraction of that. Today’s confirmation of a 462,000-tonne flash sale was meaningful in size, but nowhere near sufficient to close the seasonal gap. Unless China begins buying more aggressively and consistently, the shortfall remains intact. Logistical constraints along the U.S. river system further limit how fast these volumes can physically move, and with Brazilian origin still competitive whenever arbitrage allows, U.S. beans and bean oil remain unable to convert today’s energy strength into meaningful upside.

In the U.S. domestic market, bean oil continues to oscillate within its well-defined range. Sub-50 cts/lb levels attract support as usual, but anything above the low 53s finds limited follow-through. Export interest remains modest. D4 RINs softened again, with nearby values indicated around 1.07 and the forward 2026 calendar trading lower. Without clarity on next year’s biomass-based diesel obligations, the curve remains hesitant. Buyers are reluctant to commit, and sellers reduce exposure into year-end, which pushes RIN values lower even as gas oil pushes higher.

Northwest Europe saw increased activity in the ARAG window today, even if sentiment remained cautious. RME traded near +$775–776 with flat prices around $1,457/mt. FAME 0 hovered around +$645/mt, and UCOME traded near $795–800/mt. All of these shifts reflect the move in gasoil rather than any underlying biodiesel strength. HVO Class II continued to transact in the $1,346–1,350 range, keeping a strong flat-price premium above $2,465/mt, though the differential to waste-based biodiesel continues to narrow gradually.

A significant talking point in Europe today was the very delayed release of German blending data, which only covers activity through August but includes HVO volumes for the first time. In August, biodiesel blending was slightly above 200,000 tonnes, while HVO blending registered around 10,000 tonnes. With diesel consumption lower, HVO’s share of the blend rose to 7.3%. Over January–August, biodiesel usage totaled just under 1.6 million tonnes, while HVO volumes came in around 113,000 tonnes. Since biodiesel incorporation is capped at 7% under EN590, any future increases required to meet tightening GHG-reduction obligations will fall primarily on HVO, which can be blended well above that limit. This structural shift helps explain why HVO prices in ARAG remain firm despite abundant waste-oil availability.

European forward paper markets continued softening after the exceptional activity earlier in the month. Rapeseed oil indications drifted into the low €1,060s nearby and toward €1,055 forward. Combined with persistent palm weakness and pressure from Chinese vegoil futures — particularly rapeseed oil — Europe remains firmly defensive.

Palm oil remains the anchor for the entire vegoil complex. Even with futures above 4,100 MYR, physical trades into India stay confined to the $1,065–1,095 range. Olein continues to meet resistance in China, and with stocks rising and destination demand not accelerating, palm must continue adjusting lower until it clears.

Even with today’s contradictory strength in gasoil, traders noted that broader geopolitical signals remain constructive. The USD/RUB rate continues to trade near 76.50, its strongest levels of the year and far from the highs above 115, suggesting negotiations may still be progressing. This makes today’s firmer gasoil — and the Dec/Apr backwardation widening to about +36.75 — look more like pre-weekend positioning than a shift in fundamentals. If diplomatic momentum continues, diesel cracks could still correct quickly, placing renewed downward pressure on BOGO.

Distillate markets remain supported by a strong heat crack and persistent backwardation, but the geopolitical overlay keeps the market alert to the risk of a sharp unwind. A $10–20/bbl correction in diesel cracks remains entirely plausible if negotiations advance.

Overall, the biodiesel market continues to reflect a clear structural imbalance: energy is tight, vegoils are long. Energy rallies; vegoils do not. Palm stays weak, and BOPO rises accordingly. Brazil’s new-crop soyoil window — priced at –520 to –590 — quantifies the depth of the oversupply. China remains behind schedule despite today’s 462,000-tonne purchase. Brazil delays its mandate increase. Europe’s incremental blending shifts toward HVO. U.S. RINs soften without policy direction. Until palm clears and Brazil’s oil burden lightens, biodiesel markets will remain defensive, with spreads — not outright prices — delivering the clearest signals.