Northwest Europe Biodiesel premiums charge ahead as Gasoil flat price finally breaks down by >5% in line with Brent, as screen heat crack rises by 10% to $22/brl. BOGO rises to +$306/mt, which is nearly +60% in the last 3 months, and RME trades well above +$600/mt FOB ARAG or a flat price of $1285/mt. Bean oil only moves down by 2.7%, but the market has yet to absorb all the fundamental news as Brazil and Argentina continue to increase their Biodiesel output by +23% and +44%, respectively, which combined will be nearly 9 million MT this year, mostly (70%) from domestic Soyoil. EU and US regulatory blocks to Biodiesel exports from South America have caused a boom in Biodiesel production and use in both Brazil and now Argentina. This is a similar phenomenon that we have seen in Indonesia. Meanwhile, the EPA released Biodiesel/Renewable diesel production figures for September, showing that Bio/HVO production in the US is down by 10.9% month-on-month and 8% less than the same month last year. This is an unusual trend since overall production from January to September for the year is up by 11% to 13.5 million MT. The only imports into the US in September were up by +45% month-on-month, mostly related to Singapore - most probably using newly acquired Houston storage. Energy price management perception by a new US administration will be key to the scope of Biofuels as we approach the US elections, and probably this will add tremendous volatility to prices over the next 4-5 weeks.
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