The global market continues to say:“There is enough vegetable oil.”The U.S. market continues to say:“There is not enough RFS-qualified feedstock.”

ICE Jun gasoil settled today at $1149.75/mt, down another $21.25/mt or 1.81% on the session, while the nearby Jun/Dec backwardation still held near an extraordinary $209.50/mt. Even after the recent correction, prompt diesel structures remain historically tight and continue to signal constrained nearby middle distillate availability. Storm of headlines continue to emanate from Pakistan/Iran and Washington that no one can control.

The correction in gasoil has not materially weakened U.S. soybean oil. Jul CBOT soybean oil settled near 74.66 cents/lb, equivalent to roughly $1646/mt, while Jun BOGO remained near $520.55/mt. Those are historically elevated levels considering nearby Argentine FOB soybean oil for June was still offered near CBOT Jul minus 2100 to 2200 points, implying outright FOB values around $1161-1183/mt. Brazilian June FOB soybean oil was similarly weak near $1179-1201/mt.

The global market therefore continues to show plentiful vegetable oil availability outside the United States. CFR West Coast India soybean oil traded near $1260/mt today, only around $15/mt above nearby CPO swaps into West India. That is an unusually narrow spread and signals soybean oil remains competitively priced into one of the world’s largest edible oil import markets.

Europe is also not displaying signs of feedstock scarcity. FOB soybean oil values in Europe remain quoted in EUR/mt and continue to lag the strength observed in U.S. domestic bean oil pricing. In the biofuels complex, nearby UCOME barges traded near $1603/mt flat price while RME barges traded near $1484/mt and FAME 0 near $1440/mt. UCOME premiums near $423/mt over ICE gasoil continue to reflect the value of low-carbon compliance molecules more than outright vegetable oil scarcity.

The real story remains inside the U.S. compliance market.

Proposed California LCFS pathways tied to BP’s Cherry Point refinery in Blaine, Washington, highlighted how aggressively the market continues to discriminate between feedstocks based on CI values. The proposed pathways showed UCO renewable diesel at 20.69 CI, distillers corn oil renewable diesel at 28.06 CI, animal fat renewable diesel at 33.39 CI, canola renewable diesel at 52.14 CI, and soybean oil renewable diesel at 58.10 CI.

Those numbers matter enormously in a market where California LCFS credits recently traded above $71/ton before correcting back toward roughly $66-67/ton currently. Even after the pullback, low-CI pathways continue to generate materially larger compliance value than soybean oil pathways.

The implication is increasingly clear. The U.S. market is no longer pricing vegetable oils primarily as food commodities. It is pricing them as carbon-intensity differentiated compliance molecules.

This also helps explain why distillers corn oil continues to surge. DCO prices recently traded near 80 cents/lb while soybean oil traded near 74.66 cents/lb, despite DCO historically trading at a discount to soybean oil. The market is assigning a premium to low-CI feedstocks capable of maximizing LCFS and 45Z economics.

At the same time, higher ethanol blending still matters for the soybean oil market because the RFS remains a nested system. Every additional gallon of ethanol blended into the U.S. gasoline pool generates D6 RINs and helps refiners satisfy a larger portion of their overall renewable obligation. That indirectly changes the economics of the higher value nested RIN categories such as D4 biomass-based diesel RINs.

EPA extended the E15 waiver through June 9, allowing continued nationwide summer E15 sales. U.S. ethanol blending rates are already running near 10-11% nationally, while E15 availability continues expanding. Brazil meanwhile operates near E30 nationwide and is discussing E32 blends. The Philippines maintains E10 mandates while Thailand continues promoting E20 and E85 adoption.

The important point is that higher ethanol blending expands the renewable fuel pool overall and reduces some pressure on obligated parties. But it does not solve the structural shortage of low-CI biomass-based diesel feedstocks qualifying for D4 generation. That is why soybean oil, UCO, tallow, and DCO continue trading with compliance-driven premiums despite globally comfortable vegoil balances.

Today’s EPA RIN generation release reinforced that point sharply. April D4 RIN generation printed at 690.1 million gallons equivalent, well above March’s revised 652.8 million gallons equivalent and dramatically above February’s 481 million. Despite that strong generation pace, D4 RINs remain historically elevated because the market continues to anticipate structurally tight qualified feedstock availability and aggressive renewable diesel capacity utilization.

Ethanol economics themselves remain distorted by policy support. Ethanol reportedly trades below 55% gasoline parity, yet crush margins remain profitable due to coproduct values and expected 45Z support after removal of ILUC penalties. DDGS values traded near $164.93/ST while soybean meal traded near $330.90/ST.

U.S. ethanol production also remains elevated. Weekly production recently rebounded back above 1.1 million barrels/day, near the upper end of seasonal historical ranges, while ethanol stocks remain near 24.88 million barrels, still historically comfortable. The combination of E15 expansion, 45Z support, and improving coproduct economics is encouraging production growth even while export arbitrage remains difficult.

China’s latest agricultural import data meanwhile does not support a global demand slowdown narrative. China imported 25.15 million metric tons of soybeans during Jan-Apr, up 8% year-on-year, while April soybean imports surged 40% year-on-year to 8.48 million metric tons. Wheat imports rose 130% year-on-year to 2.43 million metric tons while barley imports increased 32% to 4.87 million metric tons. Sorghum imports also rose 20% year-on-year to 1.56 million metric tons.

Those are not recessionary agricultural import numbers.

The Chinese data instead suggests continued replenishment and strategic inventory accumulation across multiple agricultural commodities despite concerns surrounding domestic economic weakness. Pork imports were down 30% year-on-year to 250,000 metric tons, but that appears more related to stronger domestic Chinese production than collapsing consumption.

At the same time, broader oil market balances continue tightening rapidly beneath the surface. HFI Research noted that observable oil inventories including satellite, oil-on-water and EIA data reportedly declined by roughly 121 million barrels during the last two weeks while Goldman Sachs estimated visible global inventory draws running near 8.7 million b/d during May.

The most important signal may now be global oil-on-water inventories. Current estimates show 2026 crude plus product inventories on water collapsing from nearly 1.9 billion barrels early in the year toward roughly 1.69 billion barrels recently, now materially below both 2023 and 2025 levels.

According to recent market estimates, global crude exports are reportedly running about 6 million b/d below last year despite U.S. exports averaging an extraordinary 5.6 million b/d this month, up 2.1 million b/d year-on-year. Some analysts now argue that current U.S. export levels are unsustainable because domestic commercial inventories could approach operational minimums by July.

That tightening backdrop helps explain why distillate structures remain extremely backwardated despite the recent flat price correction in gasoil.

Energy markets also continue to display contradictory signals. Singapore gasoline cracks reportedly rose toward $24/bbl over Brent after Singapore light distillate inventories fell to a two-week low near 14.878 million barrels. U.S. gasoline inventories meanwhile declined another 1.5 million barrels last week to 214.2 million barrels.

At the same time, industrial diesel consumers in India are increasingly bypassing bulk supply systems and purchasing diesel directly from retail stations because bulk diesel prices are now reportedly 40-42 rupees/liter above subsidized retail pricing. Diesel demand at some retail locations reportedly surged 20-30%.

Those are not the characteristics of a weak distillate market.

Refining margins also remain historically strong globally. Petrobras refinery utilization reportedly reached 97.4% during March, the highest monthly level since December 2014. Refined product output rose 6.7% quarter-on-quarter to 1.816 million barrels/day while S-10 diesel production hit a monthly record of 512 kbpd. Petrobras also signed supply agreements for diesel containing 15% biodiesel blends.

The broader market message therefore remains remarkably consistent: global vegetable oil balances remain comfortable outside the United States, but the U.S. compliance market continues to aggressively reward low-CI, RFS-qualified feedstocks. That divergence is now driving unprecedented distortions between domestic and international vegetable oil pricing while tightening global distillate balances continue to underpin the entire biofuels complex.