Wed 5Dec2018: ICE gasoil rebounded to $580 as Brent reached back to $62 while 3:2:1 crack stays at $14.05/brl buoyed mostly by diesel demand (HO crack at $26.46/brl) as gasoline crack dropped back below $10/brl. The trade has welcomed the news on RVOs in a cautious fashion as small refinery waivers continue to be issued despite the headlines – this administration has not refused a single request. The question of co-processing in 2019 is also disruptive as clearly its impact is not well understood yet. Despite this, RINs have moved back up to 45cpg but this is much less than anticipated since BOGO is now +64/MT for Jan futures (it has moved from -$60 on Nov 1: this is a $120/MT move!) while POGO third month is -$46/MT. US Biodiesel margins are very poor at this moment as Heating oil still not high enough to compensate for the rise of Soyoil. EU RME premiums have moved higher again to +$867/MT over ICE gasoil on the spot while Q4 showing +480 showing how inverted this market is while RED FAME is showing nearby +225 and Q2 +265 in a contango as traders buying back of curve as clearly blending RME not exactly the best strategy for meeting the EU mandate although it would seem that many EU members scrambling to meet it before end-of-year which is only one of the reasons causing inversion. Although US/China have paused escalation of trade tariffs for now, we are clearly looking at a resumption of Soybean exports from US to China after Brazil enjoyed a record soybean export month in Nov of 5.1 Mil MT instead of their usual 2 Mil MT… This should continue to lift the soy complex.

 

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