PRIMA’s California LCFS Index climbed by 50 cents to $104.50 in thin pre-Thanksgiving discussion which saw bid/ask spreads wider than the tighter early week markets which led to sizeable trading. Buyers on Wednesday walked their best bid up $1 to $104 from the last trading session, while offers pulled back into the high-$100s from Tuesday’s $105 finish. Wednesday’s LCFS Index print brought the weekly average Index price to $104.30, up $3 from last week and significantly above the past month’s average price of $99.33.
In the wider US biofuel markets, Houston biodiesel closed Wednesday at $2.31/gal leaving the 5-day average at $2.28/gal. Midwest biodiesel premiums to heating oil have nudged into low the low-90 cents/gal for spot transfer while Q1 discussions stand above 100 cents/gal, offsetting the pull on biodiesel flat price from heating oil’s slide below $1.40/gal. The mid-market value for D4 RINs finished at 67cents/gal, compared with the 18.19cents/gal premium which current LCFS credit prices offer standard CI Midwest SME. Lower CI Midwest corn oil (CI 4) based biodiesel in contrast has seen its LCFS market premium push to a $1.23/gal equivalent incentive to ship to California.
The D5/D6 RIN spread has meanwhile climbed above 20 cents during the past few days, closing at 24.5 cents on Wednesday. D5 prices have edged into the mid-50s cents/gal, compared with a 33 cents/gal LCFS premium for Brazilian sugarcane ethanol. Arbitrage opportunities for Brazilian ethanol to ship to the west coast remain closed, however, as the price of Brazilian anhydrous ethanol FOB Santos has climbed to $2.65, well above prices for Midwest corn ethanol delivered to California when freight is included.