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RME biodiesel hits five-year high as low Rhine levels continue to support market

London — European RME prices have risen to a five-year high as ongoing logistical issues stemming from low water levels along the Rhine continued to make their presence felt in the biodiesel market.

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The RME outright price rose to $1,260.50/mt FOB ARA Tuesday, to be up 4.8% week on week to its highest level since October 3, 2013, S&P Global Platts data showed.

RME's premium to FAME 0 also posted a fresh record high Tuesday at $382/mt, $85/mt wider than a week earlier, which was also an all-time high.

Indeed, over the course of October, the relationship has hit new record highs seven times, reflecting the unprecedented landscape that the European biodiesel market has found itself in, following its logistical issues.

The low Rhine water level has been preventing material leaving production facilities, meaning the movement of rapeseed to facilities for crushing and the movement of the finished RME is largely impossible.

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The latter of these has been more strongly felt in the market as with many crushing facilities, feedstock is stored locally, but there have been issues moving rapeseed oil to biodiesel plants also.

"The Rhine is dry. Moving product out of plants, or feedstock to ARA is impossible, hence the rally in RME recently, coupled with winter demand," one source said.

With the water levels hindering many commodities, alternative methods of moving product such as rail and truck are fully booked and did not appear to be able to offer much help to the situation.

"With no rain on the horizon, I just do not see how these issues will be fixed short term," another source said.

However, water levels at the key reference point of Kaub regained some ground Wednesday, hitting 62 centimeters at 0300 GMT, though that was still far too low to enable full barge loading, which requires 1.50 meters.

RME values were already strong on seasonal factors, when demand rises into winter owing to its superior cold weather properties, and that was partly responsible for the wider RME-FAME 0 relationship.

--George Griffiths, george.griffiths@spglobal.com

--Edited by Dan Lalor, daniel.lalor@spglobal.com