POGO reaches record highs making discretionary blending difficult

In Singapore, the spread between palm oil futures and gasoil futures known as POGO has been hanging out at record highs thanks to higher soy oil prices supporting palm oil and gasoil prices hovering around 11-year lows. As such, discretionary blending demand is practically non-existent for biodiesel as it is really only attractive at below minus $120 per metric ton, while it is currently closer to $200. As such, biodiesel producers will have to rely on biodiesel mandates primarily in Malaysia and Indonesia to absorb current production.