FAME 0 flat rose 10.4% open-to-close ($1,362.25 to $1,504.00, avg $1,460.22, +9.0% MoM, +14.0% YoY), but the story was the diff to LSGO, which rebuilt +107% MoM to a $479.00 close. The mechanism is mechanical: biodiesel flat is sticky while LSGO is the volatile leg, so the premium absorbs gasoil moves; a Middle East conflict had spiked LSGO into March-April, crushing the premium to two-year lows (briefly negative on 7-Apr), and May's recovery was that war-premium unwinding while flat strengthened, though at $306.22 avg the diff remains 55% below the 2025 norm. The rally was product-led, not feedstock-led: UCO and tallow rose only modestly, so the UCOME-UCO margin expanded 24%. HVO sat out entirely (+$7/mt MoM), consistent with the RED III double-counting removal that structurally favours uncapped HVO over capped UCOME. The curve bull-steepened (M1-M12 backwardation widened to $215/mt); if gasoil re-spikes, the premium re-compresses and the front gives first.
Price Trends
FAME 0 flat climbed 10.4% open-to-close tracking gasoil higher; W1 was the breakout at +5.8% WoW.
- Opened $1,362.25/mt (01-May), closed $1,504.00/mt (28-May), monthly avg $1,460.22/mt vs April's $1,339.78/mt (+9.0% MoM) and May-25's $1,281.18/mt (+14.0% YoY).
- Monthly high $1,534.25/mt (15-May), low $1,362.25/mt (01-May); intra-month range $172.00/mt widened from April's $114.75/mt as gasoil volatility transmitted to flat.
- W1 avg $1,433.38 (+5.8% WoW); W2 $1,488.60 (+3.9%); W3 $1,459.10 (-2.0%); W4 $1,483.25 (+1.7%); the front-loaded gain stuck, with W4 holding near the highs rather than retracing.
- Largest single-session move +$48.00/mt on 12-May (prev. $1,449.25); the flat price moved with LSGO, so the flat-price read understates the month (the diff carries the signal).
Feedstock Trends
Feedstocks rose modestly while product rallied; UCOME-UCO production margin expanded 24% to $328/mt.
- UCO NWE FOB averaged $1,292.78/mt (+2.97% MoM), opening $1,285.00 and closing $1,320.00; tallow Cat 1&2 $899/mt (-0.29% MoM); UCO firmed while tallow was flat.
- UCOME-UCO production spread widened from $264.79/mt (April avg) to $327.75/mt (May avg), +23.8%, widest $375.00/mt (15-May), month-end $356.75/mt (28-May); the margin expansion came from finished product rising +$100/mt against UCO's +$37/mt, confirming a fossil-relative repricing rather than an input-cost push.
- UCO-tallow spread widened to $393.71/mt (+11.3% MoM) as UCO firmed and tallow held; UCO outpacing tallow signals waste-feedstock demand concentrating in UCO, not a broad waste-fats rally.
Cross-Commodity Dynamics
Biodiesel grades rallied in lockstep on the common gasoil driver; HVO sat out and its premium to UCOME compressed $93/mt.
- All three biodiesel diffs to LSGO more than doubled MoM (FAME0 +$158.61, RME +$147.69, UCOME +$138.40 avg), the synchronised move signalling a shared fossil driver rather than grade-specific stories.
- Diff ordering intact: UCOME $466.53 > RME $346.10 > FAME0 $306.22; the UCOME-FAME0 diff premium held at $160/mt avg ($172.75 month-end), the waste-feedstock incentive value preserved.
- HVO Class II flat +$7/mt MoM and Class III +$9/mt while biodiesel flat rose ~$100-110/mt; the HVO II-UCOME spread compressed from $1,413/mt (April avg) to $1,145.50/mt month-end as UCOME rallied and HVO did not, a divergence consistent with HVO pricing off its own (structurally supported) demand rather than the gasoil-driven biodiesel premium.
- RME flat held ~$40/mt above FAME0 (down from ~$51/mt in April) as the winter CFPP premium eased into summer.
Market Activity
FAME0 activity fell 37% as the April bargain closed; blender coverage faded and intermediary positioning took the lead.
- Ratio 0.96 bids vs offers, total transactions down 37% from April's levels; the drop in activity tracks the diff recovery, the cheap-biodiesel window having closed
- Consumer/obligated buying receded: Greenergy (blender) collapsed from 86 transactions (April top buyer) April's aggressive blender coverage, struck when biodiesel was cheapest versus gasoil, was not repeated once the premium rebuilt, with the blend wall capping any further discretionary uptake.
- Intermediary positioning led the May bid: Trafigura (trade house) was top buyer (absent from April's top five), reflecting relative-value positioning rather than physical coverage.
- Refiner and oil-major coverage steady: Petroineos, Totsa, Astra.
- Producer/major selling halved: Shell offered less than 50% of that in April, with Mercuria and Biogra new to the May seller stack; the regime change is the lighter, more balanced two-sided market replacing April's heavy blender-led bid.
Curve Structure
FAME0: Bull steepening; M1 led the back ~2.4x as the front priced the premium recovery against expected gasoil normalisation.
- Bull steepening, full backwardation at every tenor throughout: M1 rose +$70.75/mt (+5.2%) vs M12 +$29.50/mt (+2.5%); the front priced the prompt premium recovery while the back priced eventual gasoil normalisation.
- M1-M6 widened most (+$51.75/mt), the mid-curve lagging the front rally hardest.
- Pattern-shift trigger: a renewed gasoil spike compresses the prompt premium first, so the front would lead a reversal toward bear steepening or front collapse.
Something To Watch
FAME0 diff to LSGO as the blending-economics canary:
- Observation: diff closed $479/mt but averaged $306/mt, still ~$300/mt below the 2025 norm; the level is set by gasoil.
- Why it matters: sustained gasoil easing rebuilds the premium toward norm and restores certificate value; a renewed gasoil spike re-compresses it toward (or below) zero as in April.
- What to monitor: ICE LSGO front-month; weekly FAME0-LSGO close.
UCOME-UCO production margin as the run-cut canary:
- Observation: margin expanded to $328/mt avg (+23.8%) as product outpaced feedstock.
- Why it matters: if UCO firms further while gasoil caps biodiesel flat, the margin compresses and triggers UCOME run cuts, tightening finished product.
- What to monitor: UCO NWE FOB prints; weekly UCOME-UCO close.
Note: All figures, prices and market activity referenced in this report are based on the period 1 to 28 May 2026
