FAME and SME show gains

In Europe in mid-January sunflower methyl ester (SME) was trading at a $200/tonne (€155/tonne) premium to Ice gasoil for February dates fob ARA, despite reports of a prompt oversupply, a report by Argus Biofuels finds.

Bid/ask spreads for fatty acid methyl ester (FAME) zero was broadly around a $190/t premium to the Ice futures screen.

Further forward activity on the second quarter forward physical market was reported at around $200/t, indicating ongoing confidence in the existence of a B99 market despite anticipation elsewhere in the market that the EU will move to impose countervailing duties on imports of subsidised biodiesel from the US by March, the report says.

Rapeseed methyl ester biodiesel (RME) failed to match the gains seen in FAME zero and SME as producers dropped offers in northern Germany to as low as €695/t, with some dealers indicating trading potential at €670/t.

Rapeseed futures prices were also seen declining, in contrast to the US soyabean markets on 14 January, which supply the main feedstock for the production of SME and FAME zero.

The forward market was indicated in a modest contango, with third quarter RME paper bids at €695/t on 14 January. The fourth quarter was changing hands at €705/t the day before.

Ethanol prices in the European T1 market continued their downward trend on 14 January with a European oil and gas major selling at $413/m³ on a fob basis for March, with some reported offers for March as high as $435/m³, but no buyers emerged.

Traders expect prices for February to be flat with March or even trade below the $413/m³ level.
Asian palm biodiesel values held mostly unchanged, with some sellers revising their offers to lower levels with talk of lower-priced PME from the US being offered into Asia.

A B99 PME cargo for February-loading was offered at around $400/t fob US. Offers like that, if they become the norm, would limit sales of Asian PME to overseas markets like Europe, Argus Biofuels says.

There were even expectations that US-origin PME parcels could be shipped to Asia because of the price benefit of the US biodiesel tax credits.

Malaysia and Indonesia for palm methyl ester (PME) continued to hover around the $650/t fob level, against buying ideas pegged around the low $500s/t fob. A Malaysian producer, whose cargo already met the US cold soak test, was thought to have moved a 5,000t PME shipment to the US last week for January arrival at an undisclosed price.

Benchmark Malaysian palm oil futures firmed to 1,876 ringgit/t (€401/t) before it ended at 1,884 ringgit/t.

Selling indications of 99.5% anhydrous fuel grade ethanol from Thailand were at $620/t fob and above, versus the highest buying ideas at $600/t fob.