June was a diff story across the European biodiesel pool, not a flat-price one, and the split ran along RED III policy lines. FAME 0 was near flat on the month at a $1,468.84/mt average, but its diff to LSGO widened nearly $200/mt to $507.90/mt as Germany's removal of double-counting steered compliance demand toward crop-based biodiesel; RME firmed by $15.74/mt on the same rotation while UCOME softened by $15.76/mt as its double-count incentive eroded, narrowing FAME 0's discount to UCOME by $19/mt. The feedstock side led the whole chain: UCO rose 1.9% against FAME 0's 0.6%, compressing the FAME 0-UCO production margin by $16/mt to $150/mt, with active Chinese SAF and HVO producer procurement, a July Sinopec restart and firm US and Canada offtake keeping origin prices supported in the low $1,200s/t FOB, and Tallow's much smaller move confirming the bid was UCO-specific. HVO Class II and III both fell around $135/mt, their premiums over FAME 0 compressing roughly $145/mt each as the late-2025 backwardation continues to unwind. Trade activity showed producers and refiners selling into rising diffs across all three biodiesel grades while trade houses and blenders accumulated, with UCOME's diff running hardest on the feedstock bid even as its flat price eased. The curve repriced at the back, M12 up 8.0% against M1's 2.2%, flattening the M1-M12 backwardation by $59/mt on the structural RED III demand ramp; the FAME 0-UCO margin is the one to watch, as sustained UCO strength below $120/mt would force UCOME run cuts before the finished-product diff gives the signal.
Price Trends
FAME 0 averaged $1,468.84/mt, barely changed on the month, but faded 4.6% from open to close as an early-June spike unwound
- FAME 0 opened the month at $1,520.00/mt and closed at $1,450.00/mt, a fall of $70.00/mt, yet the monthly average of $1,468.84/mt edged $8.89/mt above May's $1,459.95/mt, a gain of just 0.6%.
- The month peaked early, reaching $1,543.25/mt on 3 June before sliding to its low of $1,438.25/mt on 9 June, an intra-month range of $105.00/mt.
- That 3 June high came on the largest single-day move of the month, a jump of $46.75/mt from the previous session, but the spike reversed over the following week rather than holding.
- Weekly averages trace the arc cleanly: W23 at $1,504.40/mt, W24 down 3.47% to $1,452.25/mt, W25 recovering 1.29% to $1,470.95/mt, W26 easing 1.26% to $1,452.45/mt, and W27 steadying at $1,457.13/mt.
Feedstock Trends
UCO outran the finished product, compressing the FAME 0-UCO production margin by $16/mt, with China-origin support underpinning the feedstock bid
- UCO NWE FOB averaged $1,318.64/mt against May's $1,293.68/mt, a rise of 1.9%, comfortably outpacing FAME 0's 0.6%; the feedstock, not the finished product, set the direction of the chain.
- That gap squeezed the FAME 0-UCO production margin from $166.26/mt in May to $150.20/mt in June, a loss of $16.07/mt or nearly 10%, and the month-end margin of $135.00/mt sat below the June average, so the pressure was building into the close.
- The origin market corroborates the bid: Chinese export prices have softened only slightly from early May and held broadly stable in the low $1,200s/t FOB range, a level that keeps NWE-delivered UCO firm once freight is added and gives sellers room to offer above origin cost.
- The support is demand-led on both sides of the world: Germany's removal of RED III double-counting has steered European compliance demand toward crop-based biodiesel, while in China major SAF and HVO producers including Blue Whale and Feitian continue to procure feedstock actively, with Sinopec's HVO/SAF unit scheduled to restart in July and resume buying; recently concluded cargoes to the US and Canada further limit the downside on export prices.
- Tallow told the confirming story, rising only 1.3% to $910.32/mt while the UCO-Tallow spread widened to $408.32/mt from $394.75/mt; the bid was UCO-specific, tied to its higher GHG savings and its scarcity value under the 9B cap, rather than a broad rally across waste fats
Cross-Commodity Dynamics
RED III split the biodiesel pool, firming RME while UCOME softened, as the diff to LSGO widened nearly $200/mt
- The FAME 0 diff to LSGO carried the month, averaging $507.90/mt and widening from $437.00/mt at the open to $535.00/mt at the close, some $194.11/mt above May's $313.79/mt average; with crop-based biodiesel now the compliance-preferred grade under Germany's double-counting removal, the diff is where that demand shows up.
- The pool split along policy lines: RME firmed to a $1,515.57/mt average, up $15.74/mt, while UCOME softened to $1,605.80/mt, down $15.76/mt, as obligated demand rotated toward high-GHG-savings crop grades and uncapped HVO and away from a UCOME grade losing its double-count incentive.
- FAME 0's discount to RME widened only slightly, from $39.88/mt in May to $42.17/mt, though it briefly flipped to a $5.00/mt premium on 29 June, the sole session FAME 0 traded above RME.
- Its discount to UCOME narrowed more meaningfully, from $156.34/mt to $136.95/mt, a $19.39/mt tightening as UCOME eased and FAME 0 held; UCOME keeps a premium on feedstock cost, but its structural demand pillar is eroding.
- HVO Class II and III both fell around $135/mt on the month, to $2,797.13/mt and $2,735.86/mt, their premiums over FAME 0 compressing by roughly $145/mt each; this continues the erosion off the late-2025 backwardation peak, with no June-specific catalyst confirmed.
Market Activity
Producers and refiners sold into rising diffs across all three grades while trade houses and blenders accumulated
- In FAME 0, producer and refiner supply dominated the offer, led by Greenergy with Shell alongside, met on the bid by trade-house accumulation from TotalEnergies and Gunvor; the trade diff climbed from roughly $380/mt early in the month to about $610/mt by 18 June.
- UCOME saw the steepest escalation, its trade diff running from around $540/mt to $754/mt as refiner and producer sellers including Shell, Adnoc, Cargill and Phillips 66 met heavy blender-side buying from Greenergy alongside Trafigura.
- RME was thinner but pointed the same way, with ag-crusher and refiner producers such as BP, Bunge and Saipol on the offer and Trafigura the dominant single buyer.
Curve Structure
Back-end repricing, as deferred tenors rallied 8% against the prompt's 2% and flattened M1-M12 backwardation by $59/mt
- The curve held its backwardation all month, but the action was at the back: M12 rose $90.50/mt, or 8.0%, against M1's $31.25/mt, or 2.2%, flattening the structure from the long end
- This is back repricing rather than steepening; the near-curve barely moved, with M1-M2 shifting a dollar and M1-M3 two, while M1-M6 and M1-M12 compressed sharply as the market lifted deferred value on firming RED III demand expectations even as the prompt stayed anchored
- The implication runs to hedging and producer economics: deferred-sales value improves while long-dated hedging cost rises, and if the mandate-driven demand read holds, the flattening extends toward outright bull flattening
Something To Watch
FAME 0-RME spread as the crop-grade rotation signal:
- Observation: the spread ended at a $40/mt discount, having briefly turned positive on 29 June for the first time.
- Why it matters: RED III steers demand toward high-GHG-savings crop grades, so if FAME 0 holds parity or a premium to RME it signals the rotation broadening beyond RME into the wider crop pool.
- What to monitor: the weekly FAME 0-RME close, and the RME cold-flow premium as winter approaches.
Note: All figures, prices and market activity referenced in this report are based on the period 1–30 June 2026
