Palm is now at +472.85 over ICE gasoil as consumers switch origin to Malaysia from Indonesia, dropping stocks by about 6.3%. Malaysia stocks remain at a relatively high level of 1.88 million metric tons. The $375/mt Indonesia export levy makes a significant impact on Indonesian exports, probably building stocks much beyond the 2.5 million MT previously announced by GAPKI. BOGO, on the other hand, has gone up $100/mt to +$399 since mid-Oct, buoying biodiesel RME premium in Northwest Europe to +778/mt or $1434/mt flat price. USDA report lowering US soybean crop yields added a bit of fuel but that should be temporary. Following issues at NESTE HVO plants in Singapore and now Rotterdam for a few weeks, HVO class 2 and 4 are now reaching levels that are almost as expensive as SAF ($1989 per mt). This is pushing demand towards UCOME, which is now trading at +$800/mt or $1453/mt, almost a $525/mt discount to non-crop HVO. UCOME prices are now at the highest level of this year. Additionally, Argentina SME cargoes are also on the way to Europe. Despite lower gasoil stocks this week (-2%) in ARA and a surge in inland diesel demand, it could continue to support these premiums for the short term. However these bio premiums are not sustainable as most obligated parties are already in full blending compliance for 2024, and what they really need is non-crop HVO to breach the blend wall. So we should see lower premium by late Nov once current spike in EU demand is met.
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