Argentine soyoil prices spike as EU buys three SME cargoes

7 Jul 2020 | Rei Geyssens

Soyoil prices in Argentina, the world’s largest exporter, spiked on Tuesday on news that the European Union bought three SME (soyoil methyl ester) biodiesel cargoes during the past 24 hours, propelling prices of the feedstock to their highest since February.

Basis premiums for Argentine soyoil surged by more than 50 points on the day with August shipment assessed at 2.20 ct/lb over August futures, equivalent to $684.80/mt FOB Up River, the highest spot price since February 26.

“Argentine basis premiums are up as three SME cargoes traded,” an Argentine broker said.

Two cargoes, each of 30,000 mt, traded on Monday evening at €660/mt ($745/mt) FOB Up River for August loading while a third changed hands at the same level on Tuesday.

The third cargo is for shipment between July 15 and August 15.

While the buyers of the cargoes were unknown by publication time, it is likely that Gunvor and Petroineos were part of the transactions, sources said.

SME biodiesel is predominantly blended with other types of biodiesel during the European summer season, which runs up to the end of September, due to the cold properties of the methyl ester. These are less favourable during the colder winter months.

Of the 207,000 mt of SME exported between the start of 2020 and April, Gunvor took 112,000 mt, with the balance imported by Petroineos, according to line-up data.

Argentina, which has one of the world’s largest nameplate capacities for biodiesel, was last year allowed to resume tariff-free exports into the EU of up to 1.2 million mt per year from eight selected companies, following a review and decision by the European Commission in February 2019.

The eight companies are subject to a minimum import price for the tariff-free quota based on average feedstock soybean oil prices published by the Argentine government. They otherwise attract countervailing duties of 25-33.4%, depending on the selling counterparty.