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US Bean oil disconnects from world market with implied volatility spiking to 40% in options


Bean oil/Palm oil (BOPO) futures spread has gone to $678/mt since early Jun in an unprecedented spike in Bean oil. Best bids for FOB Paranagua Bean oil are a solid -1950 under futures. implied volatility in Soybean oil options has reached 40%. Biodiesel RINs moved from 1.38 to 1.58 in a week. Clearly we can see that there is a rush by upcoming US Renewable Diesel plant to produce at max capacity before the end of the government fiscal year (Sep30) to collect the Biodiesel Tax Credit. Not sure where all that HVO will go in Q4?

Meanwhile in Europe, very low water levels on the Rhine river keeping logistic premiums firm for biodiesel as we have now stretched premiums up to +434 over ICE Gasoil which is still far away from BOGO at +$700 which tells you that this is not a demand pull situation but a logistical problem.


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