This is rather a surprising move by Admin as it essentially freezes all activities of the industry, as without BTC or 45z guidance (required for changeover to a production credit), no one will take the risk to produce any Biodiesel or RD under the IRA provision. It is not difficult to imagine the impact of this, as it will immediately simply extend all maintenance decisions for Dec into Jan or beyond in the hope of guidance. This could mean 3 months of reduced Biodiesel and RD activity with an impact of at least 1.5 billion gallons (of Bio/RD demand that could disappear - this is nearly 5 million metric tons!). This could send soybean oil to new lows (I am thinking 30 c/lbs) unless Congress comes up with BTC or 45z guidance during the lame-duck session before Dec 20, but certainly, I cannot see how we can keep current levels. Meanwhile, in Europe, the barge market traded its final spot shipments for 2024 at a higher premium, which for RME jumped to +631 while UCOME jumped to +807 over ICE gasoil with corresponding flat prices of $1307.50 and $1483. This leaves the gross margin for winter biodiesel in Northwest Europe at $152.50/mt. Soybean oil remains the cheapest soft oil in Europe at an $84/mt discount to rapeseed oil, but this author doesn't think vegetable oil flat prices can withstand US Biodiesel/RD uncertainties.
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