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Several sources indicated that June positions are largely covered, limiting the need for near-term spot buying, while discussions around July are not expected to accelerate for another one to two weeks. The lack of urgency on both sides of the market has kept liquidity thin, with many preferring to wait rather than push into new positions early.
Despite the subdued physical market, underlying biofuel signals shifted noticeably during the session. Soybean oil futures strengthened on Wednesday, with the July contract finishing at the highest level in more than a week at 75.26 cents per lb, up by 1.2% on the day.
Meanwhile, heating oil futures moved lower to their weakest level in over a month, with the June contract closing down by 3.15% on the day at $3.5975 per gallon and the July contract down by 2.55% at $3.5289.
The divergence widened the soybean oil–heating oil (BOHO) spread on paper to its widest level of the year, pointing to renewed pressure on biodiesel and renewable diesel economics from a pure feedstock-to-fuel perspective.
However, strength in credit markets continued to offset part of that pressure. D4 Renewable Identification Number (RIN) values for the 2026 compliance year climbed to fresh highs Wednesday at over 225 cents per RIN, reinforcing support for biofuel economics even as the BOHO relationship has weakened.
Still, participants cautioned that stronger RIN values alone may not be enough to fully rebalance the system. Recent run rates and RIN generation data continued to suggest the market remains behind pace to meet Renewable Fuel Standard (RFS) obligations, with some pointing out that a portion of renewable diesel and sustainable aviation fuel production continues to be directed toward export markets rather than domestic blending, limiting effective RIN generation.
Additionally, feedback on production levels remained mixed. Some market participants reported that producers continue to run aggressively, with at least one vertically integrated operator indicating that facilities are operating above nameplate capacity.
Biodiesel production overall was still described as relatively strong, supported by elevated credit values and opportunities to lock in forward fuel offtake. However, others continued to describe a more constrained operating environment, noting that high feedstock costs and margin volatility are still limiting broader participation, particularly among smaller or less integrated producers.
Feedstock markets themselves remained firm but are increasingly seen as finding a ceiling at current levels. Tight underlying supply continues to support values, but growing visibility around inbound imports has begun to act as a moderating factor.
Market participants said flows of used cooking oil and tallow from international origins are becoming more apparent, suggesting additional supply could begin capping domestic pricing if arrivals materialize as expected.
The muted tone on the day was also attributed in part to positioning ahead of policy developments, with market participants pointing to the upcoming California Air Resources Board (CARB) meeting scheduled for May 28–29.
The meeting, which is expected to address updates to California’s cap-and-invest and emissions reporting framework, may influence compliance costs and broader fuel market dynamics, prompting some participants to remain on the sidelines pending further clarity.
Looking at daily price changes, distillers corn oil values received some support from strength in soybean oil futures, with participants noting firmer sentiment despite broader volatility in energy markets.
DCO, delivered Manly, IA was assessed up by two cents per lb on the day at 87 cents per lb on Wednesday, while DCO, delivered US Gulf rose to 91-92 cents per lb, up from Tuesday’s 90-91.50 cents per lb. DCO, FOB NE/KS rose by 25 cents per lb to 86.25 cents per lb.
Additionally, continued gains were seen in poultry fat markets, with FOB Southeast and delivered East Coast prices assessed 1-4 cents per lb higher into June. Participants said seasonal heat-related specification challenges are tightening the availability of lower-FFA poultry fat, while stabilized material continues to find demand across feed and fuel outlets, contributing to a narrowing spread between the two grades.
Meanwhile, outside the US, European market sources reported buying interest for UCO on CIF Amsterdam, Rotterdam, Antwerp (ARA) basis at $1,165-1,180 per tonne, with offers at $1,190-1,220 per tonne. A deal was heard at $1,195 per tonne.
Fastmarkets assessed its daily used cooking oil, cif Amsterdam, Rotterdam, Antwerp price at $1,195 per tonne, up by $10 per tonne from previous day.
A deal for locally sourced, Europe-origin UCO was heard at €1,135 ($1,319.77) per tonne. However, during the day demand was quoted around €1,080 to €1,110 ($1,255.81 to $1,290.70) per tonne on DDP basis, against the offers at €1,125 to €1,130 ($1,308.14 to $1,313.95) per tonne.
Fastmarkets assessed its daily used cooking oil, ISCC, ddp Northwest Europe price at €1,135 ($1,319.77) per tonne, up by €15 per tonne from Tuesday.
In FOB ARA, Fastmarkets assessed its daily used cooking oil, fob Amsterdam, Rotterdam, Antwerp, Ghent price at $1,305 per tonne, unchanged from the previous day, with bids quoted at $1,290 per tonne against offers at $1,310 per tonne.
Priyanka Agarwal, in London, contributed to this report.