Biofuels: Biodiesel, ethanol jump as war threatens feedstocks, gas

Quantum Commodity Intelligence - Biodiesel and ethanol outright prices jumped to multi-month highs on Thursday after Russia invaded Ukraine, threatening natural gas supplies as well as agricultural exports from one of the world’s largest corn, wheat and oilseed producers.

RME biodiesel premiums jumped to over a one-month high of $1,091.75/mt, as rapeseed oil prices in Rotterdam rocketed €120/mt on the day on threats that rapeseed imports from Europe’s largest supplier could be caught off following Russia’s incursion.

There were three trades in the window, all sold by Petroineos, in a range of $1,090/mt to $1,095/mt.

At the same time, the underlying LSGO futures surged $65/mt to a fresh seven-year high amid fears Europe could be cut off from Russian distillate supplies, propelling the flat RME price up over $100/mt in a day to $1987.25/mt – its highest since early January.

Premiums for FAME0 biodiesel rallied $31.22/mt to a two-month high of $948/mt with five trades reported in the window, all sold by Cargill, pushing the flat price up $96.25/mt to $1,843.25/mt.

Meanwhile, UCOME traded four times, all sold by Shell, with its premium nudging $5/mt lower to $1,196.25/mt, offsetting some of the gains in the underlying gasoil futures.

T2 ethanol was bid up on the front-end to €1,063/cu m, with no trades reported, leaving the assessment €126.50/cu m higher at €1,063/cu m, amid soaring natural gas prices across Europe and fears that Europe could be caught off from Ukrainian wheat and corn supplies.

The volatile trading spurred a flurry of deals on the swaps market, with May swaps trading at €910/cu m by the open to reach €970/cu m just before the window, up €79/cu m on the day with the backwardation steepening along the curve.

The Q2-Q3 spread nearly double on the day to €60/cu m.

Theoretical crush margins for ethanol were as much as €120 lower though and possibly turned negative for wheat in some further out months, mainly on a 50% increase in the price for natural gas.

RTFC ticket prices surged higher as biodiesel prices spiked while brokers advised their clients to sit back and wait, sources told Quantum.

An offer for 2022 non-crop RTFCs was heard in the afternoon at 40.75 pence per certificate, up from a prior day assessment of 37p, with a trade earlier done at 38.75p.