March 27

3/27 - At last week’s Market Vision Conference, Brian Williams of Macquarie Bank pointed out that U.S. renewable diesel production capacity will more than double from 2.6B barrels per day (bpd) in 2022 to 5.9B bpd by the end of 2025. Thus, most analysts are very bullish on all veg-oil prices for 2024/2025. But currently, bank failures and recession fears have helped crude oil futures drop roughly $10 per barrel over the past 3 weeks. And, because of biofuel policy, soy-oil prices are now correlated (over 80%) with crude oil; soybean oil - the primary biofuel stock - has declined from a little over $.60 to $.5327 (3/24) so far in March. That means starting to lock in some long-term coverage at current levels might be the prudent thing to do. Williams thinks that soy-oil is close to bottoming over next month or so, but there could be an additional window of opportunity post-summer.