Trump vs. Grassley Shakes RFS Foundations as Biodiesel Flat Prices Drift Lower into Month-End

The biodiesel and renewable diesel (HVO/RD) markets ended July under pressure, but it was politics—not just prices—that stole the spotlight. In a surprising escalation, former President Trump publicly criticized senior GOP senators, including Chuck Grassley of Iowa—a long-standing champion of the Renewable Fuel Standard (RFS) and Midwest agriculture. This rupture raises new doubts about the future bipartisan durability of the RFS framework heading into the 2026–2027 cycle. For markets already rattled by compliance uncertainty, the political fallout is hard to ignore.

Biodiesel flat prices continued to weaken, even as the ICE Gasoil curve re-tightened. While prompt ICE Gasoil traded around $710/mt (Aug) and $703/mt (Sep), the Sep/Dec backwardation widened sharply to $26.75/mt, up 15% on the day—reflecting renewed concern over diesel availability amid potential secondary sanctions on India and China. RME traded at $1,350.80/mt, down $17.50; FAME at $1,325.80/mt; and UCOME, though not traded, was assessed at $1,453.30/mt, up $4.50. UCOME retains the best gross margin in the ARAG window at over $200/mt. Meanwhile, heat cracks fell to $31.36/bbl, down nearly $8/bbl from peak July levels, weakening somewhat refinery incentives for diesel production and blunting biodiesel blending support.

Gasoil Sep/Dec 2025

Soybean oil futures also retreated after testing two-year highs. September (ZLQ25) settled at 55.27 c/lb, down 1.26 c/lb or 2.23% on the day, while deferred months (ZLV25 and ZLZ25) held above 55.80 c/lb. BOPO (bean oil minus palm oil) stood at $216/mt, showing persistent elevation. Rotterdam FOB offers for Dutch origin soyoil held steady at Euro1,165/mt for Oct–Jan. Brazilian FOB Paranaguá basis remains deeply negative at -600 points to CBOT, with Sep shipments offered near $1,115/mt equivalent. Soft oil markets in Asia are also under pressure: palm olein and soybean oil in China eased on weak import margins and high stocks, and offers from Indonesia remain capped by limited discretionary buying. The structure still favors storing over spot movement, and importers remain sidelined.

Rapeseed and sunflower oil markets remain heavy. ZCOIX25 (European rapeseed oil futures) dropped $55 to $948.90/mt, while German origin RSO held at $1,150/mt FOB Hamburg. Despite trading at a $200–250/mt discount to soyoil, rapeseed oil continues to see tepid demand. UFOP raised concerns in a letter dated July 25 about structural damage in the European biodiesel chain, citing delays in EU action against Chinese import fraud and market distortions linked to double counting. Germany exported 1.6 million tonnes of RME in 2024—largely due to weak domestic blending. Meanwhile, the EU's 2025 rapeseed harvest is now forecast at 18.5 million tonnes, up from 16.6 million tonnes in 2024, but still short of the 25 million tonnes needed to meet total EU demand. France is leading with 4.2 million tonnes expected, up from 3.9 million tonnes in 2024. German output is unchanged at 3.9 million tonnes, but harvest progress has been slow due to persistent rain. Sunflower oil for Oct–Dec was offered at $1,220/mt, with no trades reported. Malaysian palm oil exports fell 6.7–9.6% in July depending on source (ITS vs AMSPEC), keeping CPO FOB Indonesia near $1,080/mt. Despite an announced EU-Indonesia FTA offering 0% CPO tariffs on 1 million tonnes, short-term sentiment remains subdued. Blending margins are under pressure and LCFS prices remain flat around $51/mt CO₂e.

Rapeseed Harvest EU 2025

As we move into August, the twin shocks of political volatility and global realignment collide. Trump’s attack on RFS stalwarts like Chuck Grassley weakens support for the mandate just as secondary sanctions on India and China loom. These could reroute Asian ULSD to the U.S. West Coast and push U.S. Gulf diesel toward Europe—further distorting the distillate supply chain into which biodiesel must compete. D4 RINs quickly reflected this shift, falling over 4% to $1.190 by day’s end on nearly 500 trades. The market is clearly reassessing confidence in long-term RFS enforcement. For biodiesel and HVO/RD markets, this confluence of policy risk and narrowing economics sets up a volatile and uncertain third quarter.