Crop-based biodiesel hits multi-year highs on tight feedstock

Crop-based biodiesel outright prices reached multi-year highs June 3, supported by high feedstock prices.

Platts, part of S&P Global Energy, assessed FAME 0 FOB ARA barge price at $1,535/metric ton June 3, the highest since $1,538/mt on Oct. 24, 2022, when prices were elevated on the back of the Russia-Ukraine conflict.

Platts assessed the FAME –10 CFPP FOB ARA outright price at $1,588.25/mt June 3, the highest since Feb.10, 2023, when it was assessed at $1,628/mt.

Platts assessed the rapeseed methyl ester FOB ARA flat price at $1,588.50/mt June 3. The price last reached this level on Feb. 13, 2023, when Platts assessed it at $1,560.75/mt.

The underlying feedstock, rapeseed oil, has been increasing steadily since May 11. Platts assessed the front-run rapeseed oil FOB Dutch Mill price at Eur1,149/mt ($1,337.09/mt) on June 3, up Eur31/mt since May 1.

A biofuels consultant attributed the tightness in the RSO market to difficulties securing rapeseed supplies, noting that Russian and Ukrainian product is difficult to process. This shift suggests that processors may increasingly prioritize rapeseed once the new campaign begins, potentially reducing short-term sunflower crushing activity.

In Europe, these dynamics are contributing to a market that remains supported by tight seed availability and firm origin pricing.

"Some plants are stopping work in anticipation of the rapeseed processing season," a Ukrainian vegetable oils trader told Platts.

Despite these high values, biodiesel participants noted that first-generation margins are poor.

"Rapeseed oil prices are super expensive as we are at the end of the old crop, so margins are super poor," a crop-based biodiesel producer said

"Margins are weak overall, I'd say. With the higher crop cap, people are preferring high greenhouse gas saving [feedstocks] instead," a biodiesel trader said.

Changes in legislation under the new German RED III are leading participants to utilize the crop cap more due to the higher obligation. The allowable share of conventional biofuels will rise to 5.8% by 2033, starting from 4.9% in 2027.

Additionally, Platts heard that advanced FAME has been trading at a discount to crop-based FAME in the Amsterdam-Rotterdam-Antwerp region and Germany. Participants have attributed this to the higher crop-based obligation.

"I'm getting interest for advanced FAME, but the prices are not working yet," the same biodiesel trader added.

In wider markets, regional European biodiesel prices also hit multi-year highs May 20 amid increasing demand and high production costs.