Despite the drop in vegetable oil stocks, the growth in oilseed stocks is +22.3%, while vegetable oil stocks are down 9%. This is a rather dramatic picture that especially highlights the soybean production anomaly, which is up +30%. This graph does include palm oil vegetable oil inventory, which, as the largest vegetable oil in the world, is experiencing forced domestic use for biodiesel on account of biofuel bans in both Europe and the US. Indonesia is now moving from 35% to 40% blending at great economic costs since the POGO (Palm Oil Gasoil) spread is +$220/MT. Nevertheless, the point remains - we are perhaps growing the wrong kind of oilseeds. Increased production of canola in the US in 2024 is directly related to increased use in the Biodiesel/RD mix - we got that right. Nevertheless, it is important to show that the Biodiesel/RD industry has been steadily moving towards waste oils on both sides of the Atlantic from a regulatory standpoint, yet we keep growing more soy. This is exemplified in the change in the mix of feedstocks in the United States, which is evolving like Europe and California towards lower carbon intensity feedstocks. The only exception is palm oil, which is banned, while prior to being banned, it had achieved generally much lower carbon intensity scores. Europe is still treating, for now, palm effluent as an advanced feedstock worthy of double counting for blending purposes. In the absence of technological changes in soybean agriculture and/or crushing technology, there is a strong case to be made here that pricing of Soyoil is inconsistent with demand perspective and we should see much lower values to put us back on the right path. Bio trade was quiet today as BOGO took another dive to +$161/MT, visiting the lows of last August.
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