The biodiesel and vegetable oil markets are experiencing notable fluctuations, influenced by political shifts, regulatory uncertainties, and evolving supply-demand dynamics. Here’s a breakdown of the latest developments:
Biodiesel Prices Decline on Gas Oil Weakness
Outright FOB ARA prices for biodiesels have slid alongside falling gas oil values:
- UCOME: $1,425/mt
- FAME0: $1,205/mt
- FAME-10: $1,230/mt
The decline in gasoil prices, with LSGO dropping by $5/mt to $737/mt, coincides with U.S. President Trump’s announcement of plans to ramp up fossil fuel production and exports. Declaring a national energy emergency on his first day in office, Trump has justified expanded oil and gas drilling, adding pressure to the biodiesel sector.
Vegetable Oil Markets React to Mixed Signals
- Crude Palm Oil (CPO): Prices are under pressure due to weaker demand and lower energy prices.
- Soy Oil: CBOT soy oil saw a slight week-on-week dip, driven by updated Brazilian crop forecasts and uncertainty surrounding U.S. Treasury guidance on 45Z tax credits.
- Sunflower Oil: Bucking the downward trend, sunflower oil prices remain robust due to elevated sunseed costs in Ukraine and lagging production volumes.
Brazil’s Soybean Forecast Hits New High
Brazil’s Agroconsult has raised its soybean crop forecast to a record-breaking 172.4 million metric tons (mmt), up from the previous estimate of 172.2 mmt. This adjustment comes ahead of an anticipated crop tour, underscoring Brazil’s growing dominance in global soybean production.
Used Cooking Oil (UCO) Holds Firm Despite Market Uncertainty
UCO prices remain resilient:
- EXW Netherlands: EUR 1,125/mt
- FOB China: $970/mt
Strong pricing is attributed to reduced activity in Indonesia and the upcoming Chinese New Year, which has tightened supply. However, Chinese sellers report weaker bids from U.S. buyers, citing uncertainty surrounding 45Z tax incentives. President Trump’s freeze on pending federal rules, including Treasury guidance on 45Z, has further complicated the market outlook.
Indonesian Feedstock Trade Stalled
Export restrictions in Indonesia have disrupted the trade of UCO and POME (palm oil mill effluent), with some contracts reportedly canceled. One Indonesian feedstock trader noted, “There are no short-term deals due to the ongoing uncertainties.”
Looking Ahead
The interplay between regulatory shifts, geopolitical developments, and weather-driven agricultural forecasts will continue to shape market movements in the coming weeks. Stakeholders are closely monitoring the impact of U.S. policies and the evolution of demand patterns in major consuming regions.