The strongest oil rally in 25 years has wiped nearly $20/t from the front month bean oil/gasoil spread since Monday morning, despite expectations the DOE will print another crude build in tomorrow’s data set as the end of the US driving season takes the pressure off US refiners.
US bean oil meanwhile struggled to build on Friday’s rally despite the steep upswing in crude oil. EIA data released on Monday shows US biodiesel offtake of soybean oil slipping behind consumption of animal fats which continues to gather pace in the expanding US biodiesel market.
Tallow supplied 198mn lbs of US biodiesel input in the first six months of this year, a gain of nearly 16% YoY relative to a 10% YoY climb in US soybean oil consumption for biodiesel production during the same period. Soybean oil offtake will likely accelerate over the next four months in anticipation of an extended blenders’ credit.