Ethanol Blog

Bulging Supply, Weak RINs

By Myke Feinman , Refined Fuels Reporter

Soy methyl ester biodiesel spot prices are under pressure in what is described as a market saturated with supply, with production seen satisfying this year's volume mandate under the Renewable Fuel Standard that has also weakened the value of biomass-based diesel D4 Renewable Identification Numbers.

The weaker RIN value, trading 37.5 cents today compared with a $1.46 high for the year reached July 17, also adds to the decline in spot biodiesel prices.

"RINs are low, so that equals a low basis," commented a broker this morning. "RINs are weak, pulling down physical," a trader agreed. "It does this every year at the end."

The Renewable Volume Obligation for biomass-based diesel this year is 1.28 billion gallons, with the Environmental Protection Agency reporting 2013 production ending the third quarter at roughly 1.2 billion gallons.

SME biodiesel in Chicago and Houston reached price parity, talked at $1.25 to $1.35 premiums to NYMEX ULSD futures that puts spot price between $4.09 and $4.19 per gallon today, down 18.0 cents in Chicago this week and 13.0 cents in Houston.

Myke Feinman can be reached at myke.feinman@telventdtn.com.

(ES)

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