Since Nov 11, we have come down from 0.79c/gal to 0.588c/gal as Congress will not address the issues with the IRA or expiring BTC during the lame-duck session. It is unlikely that there will be a deal since Republicans will have a majority after Jan 20. This leaves the industry in limbo as they move from a blending credit to a production credit without GREET (which lowers CI). RVOs (Renewable Volume Obligations) for renewable fuels have already been announced for 2025, which is +3.7% over 2024, so not much guessing here. Many producers will go into extended maintenance during this uncertain period, especially since they need to zero out their feedstock to accommodate the new rules of 45Z (producer credit). Meanwhile, BOPO has collapsed further with Jan now showing -$135.73 after palm oil rose while bean oil fell last week. Palm rose despite higher stocks of 3 Mil MT, with everyone wondering how Indonesia will manage to finance the POGO spread of $355/mt with the $375/mt export levy with faltering monthly exports now below 2.0 Million MT. In NWE, barge RME premium traded almost $100/mt below last week, and the flat price is now $192/mt below where it was on Nov 12 as we are only one week away from closing out Dec 24 barge deliveries. FAME premiums were down to +500/mt over ICE gasoil, which is $175/mt lower than on Nov 12, while the flat price was down $162/mt. Volatility has been spectacular while BOGO has returned to +229 with a contango showing +267 through Aug 25. New mandates in EU on SAF and Maritime bio starting in just 4 weeks will have to converge with production uncertainties in the US and higher transformation costs in Europe while regulators are forcing the industry to move away from crop-based oils at a time of record production. This can only mean higher premiums and lower flat prices with a seasoning of high volatility.
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