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Used Cooking Oil, Soybean Oil, Soybean Meal, WVO, UCO, Biodiesel

Corn Oil  

The production of soybeans in South America, especially Brazil and Argentina, will most probably be lower than predicted as dry weather is present in large parts of the continent. Unfortunately, there is low chance of rain in the coming days.


Palm oil prices fell in the first days of February due to high stockpiles of the product in Malaysia. Such high stockpiles were largely caused by limited export to China, the second-biggest importer of palm oil, which celebrated Lunar New Year Holidays. However, the situation will most likely change as the worsening weather conditions in South America might negatively influence the soybean crop there and therefore the demand for palm oil should grow.


World production of rapeseed and canola is also expected to be record-high this season. It is predicted to go up to 69.3 million tons as harvests in Russia, EU and Australia should be even better than previously estimated. Canola production is also booming in Canada, however, the country cannot benefit much from overseas demand for the product due to insufficient number of rail cars.


Record-high oilseed crops are also predicted in India as farmers there can benefit from the best monsoon rains since 2007. Therefore, the production there can climb by more than 7% compared to last season’s harvests and thus India will probably limit its oilseed imports.


This season’s harvests of oilseeds seem to have no precedence. As a result, the bearish scenario for this market should continue.



Used cooking oil: low demand across Europe


For two weeks, the UCO market has been experiencing a significant decline in prices due to the sharp drop in prices of biodiesel and the temporary shutdown of two producers. The demand is still present in Western and Southern Europe, but a significant decrease in consumption can be felt in Central Europe. This trend also creates a slowdown in imports. Thus, the price of UCO ISCC EU from January to March remains almost the same as the price of UCO ISCC DE which has recently decreased by €10. Indeed, the UCO ISCC DE is still facing very low demand and the fall in prices is severe. Market operators for UCO are expecting the current trend of biodiesel market which is regaining some strength in the coming days. There is still no positive return of demand for double counting product in Germany.





Tallow CAT 1/2 market remains quiet before the fight for Q2


We are still seeing few hundred tons available for February and March, especially in the South of Europe. Concerning negotiation for Q2, buyers are currently asking prices for the second trimester without closing deals at the moment as the sellers expect prices to go up for spring but there is a lot of uncertainty about the TME prices from the buyers‘ side.  As soon as buyers get a better view on TME prices in the second quarter we expect that the deals will be closed very rapidly due to the high competition between all TME producers.



Biodiesel market: market starts to move again


The GO and veg-oils prices sharply rebounded at the beginning of February. We have seen significant improvement in the demand and liquidity on the FAME 0° market. The level of price for FAME 0° is now around ICE + $170/mt in prompt and $195/mt for Q2 in ARA.


As a result, the spread between FAME (€805/mt FOBA ARA) and RME (€815/mt FOB ARA) is still really low and SME is traded at around the same price as RME. Nevertheless, the PME (€765/mt FOB ARA) demand is still low in prompt but should increase within the next few weeks with summer time specifications coming in place.


After 2-3 months of low activity for double counting material, the demand is starting to appear again and prices are coming up to meet expectations of the producers. UCOME ISCC EU is traded around €950/mt and UCOME ISCC DE for €970/mt.


We can see that the spread between ISCC EU and DE is now narrowing again. Due to the very low premium of the CFPP, interest for TME (€910/mt FOB) was quite high. Nevertheless, the production margins remain relatively low.


The Spanish quotas have been allocated for the next 2 years starting in May 2014 and they account for around 4.5 million tons per year. Around 70% of the producers who will benefit from the quota are based in Spain. Moreover 30% of the total quantities were assigned to biodiesel plants producing DC materials. So, we can imagine that it is an anticipation of Spanish Government implementing DC in their mandate.


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