US Oilseed crushers make a last attempt at changing 45z before elections and Jan 1 implementation

Last votes for the US Congress before the November elections will occur this Friday, and we note that a bill, the "Farmers First Fuel Incentives Act," has been proposed. This bill would limit the use of US-sourced feedstocks and extend 45z through 2034 instead of the current deadline of December 31, 2027. The crushing industry still does not understand the carbon intensity issue, nor do the politicians. I have serious doubts it will be passed due to the short time allowed to consider it. If they were to pass this law, it would dramatically reduce overall CI across the board and put many Renewable Diesel plants out of business. The only way to address the CI issue is for crushing plant capacity to adopt more creative carbon intensity manufacturing improvements, including carbon removal technology. This would, of course, greatly increase the capital costs of many of these new crushing projects since the benefits would only apply to the 20-40% contribution of the oil being extracted. The other way, of course, is to implement smart agriculture, but that is a more long-term process. Meanwhile, prices in Northwest Europe continue to be under pressure, especially F0 and UCOME, while RME (winter biodiesel) demand remains steady with a flat price now at $1161 FOB ARAG. Northwest Europe Rapeseed oil continues to build an inverse in Oct +$6/mt while the cheapest Soyoil is building at a nice contango of $22/mt through early next year. Soyoil futures are trading higher on a tighter end-of-season balance sheet while the harvest in the US remains slightly ahead of normal at 13% completed. Additionally, pressure from the Palm oil rally on account of Indonesia's attempts to increase the biodiesel blend rate nationally to 40% starting Jan 1 is pushing all vegoil prices higher. This Indonesia push has already taken POGO from +$100/mt to +$278/mt in less than 45 days. This, of course, will impact the global vegetable oil balance sheet but will also be dependent on Indonesia govt ability to finance this increasing POGO premium.