Biofuels: Ethanol, biodiesel margins rebound as ags, energy slumps

Quantum Commodity Intelligence - The key agricultural feedstocks that underpin European biofuels prices plummeted Friday, reversing course as the market priced in a revised impact of Russia sanctions across the commodity complex and profit-taking after the prior session's mammoth gains.

Biofuels held their ground though with biodiesel premiums shooting upwards to partially compensate for falling gasoil even though losses on vegoils outpaced those on LSGO futures, while ethanol margins rebounded up to €170 to more than recover prior day falls.

Spot FAME 0 traded higher to be assessed up $25.25/mt on the day at $973.25/mt, while RME was up $48.25/mt at $1,140/mt and UCOME barges gained $36.25/mt to $1,232.50/mt, all of which extended multi-week highs.

Biodiesel premium swaps also continued higher for FAME 0 and RME, although UCOME saw pegs for Q2 and Q3 drop slightly.

Meanwhile, March and April low sulfur gasoil futures fell $52.75/mt and $50.25/mt respectively amid the general slump in energy to lead the way downwards for vegoils which are related more than ever to blend value for biofuels into road fuels.

The drop on vegoils was greater than on LSGO though to leave prompt BO-GO down $27/mt and PO-GO $63/mt lower.

RO-GO was hard to call with bids for physical RSO disappearing in the afternoon as markets nosedived, but the winter biodiesel feedstock seemed to be holding firmer than SBO and CPO, likely supported by the crisis in Ukraine which is a large exporter of rapeseed and sunflower oil.

The T2 ethanol also held firm relative to the fossil complex, but flat prices were down again, led by a 25-30% drop in TTF natural gas and up to 11% falls for wheat.

Spot ethanol barges FOB ARA were assessed down €4/cu m at €1,059/cu m reflecting the move through the steeply backwardated market and as March swaps held their ground to trade at €1,010/cu m.

March was the only month not to see losses though, with the rest of the curve trading lower through the day.

Despite the drop in forward values, crush margins were drastically higher due to the far greater losses in feedstock and energy input values.

The corn futures curve was a slight anomaly with the March corn contract gaining €3.5/mt while the rest of the curve fell, again likely pricing in the impact of curtailed Ukrainian supply and as US weekly exports exceeded expectations.

The UK RTFC market sprang to life with upwards of 25 million certificates for 2022 at values between 38.5p and 38.9p reported traded.

Value for 2022 non-crop was assessed at 38.7p, down 1.1p on the day.

Theoretical replacement values fell by around the same amount with the pound gaining strength against the dollar and forward UCOME premiums weakening.

Product	Heards
FAME 0 Biodiesel Barge FOB ARA Premium	Trades: $960/mt, $975/mt, $985/mt
RME Biodiesel Barge FOB ARA Premium	Trades: 4x $1,140/mt
UCOME Biodiesel Barge FOB ARA Premium	Trades: $1,230/mt, $1,235/mt
Ethanol T2 Barge FOB ARA	None
UK Road Transport Fuel Certificate (RTFC)	Trades: 38.5p to 38.9p, vol 25+ million