Despite large screen heat crack values and lower flat price, backwardation is exploding again through dec on amplified geopolitical events. Largely speaking and on a technical level gasoil (ULSD) is simply not doing much and in fact still looks quite bearish. Northwest Europe biodiesel premium reacted favorably with flat price up $10/mt for RME at 1160/mt FOB ARAG. Gross margin for winter biodiesel (RME) remains sufficient at $89/mt to vertically integrated producers. Rhine water forecast has made a remarkable recovery in last few days and should improved logistics Meanwhile in SouthAmerica Soybean oil paranagua spot premium have been very strong (+250z) on end-of-season low inventories and concerns over lack of rain at planting time. However weather picture is looking better for early Oct with widespread rains in key growing areas of Brazil. We are only 39 days from US presidential elections and we should expect volatility. Gasoil chart is technically unchanged and still expect $627 to get tested.
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