Biodiesel Spreads Top $400, Driving European Feedstock Price Spike

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Used cooking oil prices in Northwest Europe jumped more than €50 per tonne in a single mid-week session for the week ending 10 September 2026, peaking near €1,280-€1,290 per tonne on a delivered basis before easing slightly on Thursday.

Behind the spike sat a market pulling in one direction. ICE gasoil futures crested $1,464 per tonne, biodiesel production margins blew out past $400 per tonne, and supply pressures hit several distinct feedstock categories at once.

That convergence gave biodiesel producers both the reason and the financial room to bid aggressively for raw material. When the spread between what a producer sells biodiesel for and what it pays for feedstock widens this far, procurement behaviour changes fast.

Here is what each of the major feedstock categories moved to, why the rally happened, and what the structural forces underneath it signal about where European biofuel feedstock prices go from here.

UCO prices spike mid-week as biodiesel spreads give producers room to bid

The move was large and it was quick. UCO on a delivered duty paid (DDP) basis into Northwest Europe climbed past €1,280 per tonne at its mid-week high, a rise of more than €50 per tonne inside the week before a modest Thursday pullback.

This was not a random spike. It was a rational producer response to margin conditions.

The mechanism sits in the UCOME-UCO production spread, which measures the gap between the price of UCO methyl ester (the biodiesel made from used cooking oil) and the cost of the UCO feedstock itself. For the reference week, that spread ran above $400 per tonne.

The margin driver: The UCOME-UCO production spread exceeded $400 per tonne for the week ending 10 September 2026, giving producers the financial headroom to chase feedstock rather than absorb higher costs.

A spread that wide tells you producers were not simply swallowing dearer inputs. They were actively competing for material because their output economics could support it. That distinction matters, because it means UCO price strength has a structural floor for as long as gasoil stays elevated.

The one constraint on how hard producers can push is regulation. Annex IX Part B feedstocks, which include UCO, are capped at a limited share of transport energy per member state, so beyond a point the marginal tonne of UCO-based biodiesel cannot earn full compliance credit. That caps enthusiasm, but it did not stop the bidding this week.

The import market told a similar story, split by how the cargo arrives.

Asian UCO supply chains have been under independent pressure in 2026, with Indonesian export volumes declining sharply, a dynamic that has tightened the global feedstock pool and reinforced European import premiums well before this week’s margin-driven bidding lifted domestic prices.

Note the container-versus-bulk gap in the CIF ARA (Amsterdam-Rotterdam-Antwerp) import market. Container deliveries traded near $1,300-$1,305 per tonne against bulk at $1,365-$1,375 per tonne, and rising freight costs have been narrowing that traditional spread. For anyone tracking European feedstock values, the gap between biodiesel output prices and feedstock inputs is the leading indicator worth watching.

Poultry fat leads animal fat gains as fish oil shortage reshapes feed demand

The biggest animal fat move this week did not start in the biofuel sector at all. It started in the fish tanks of South America.

Supply tightness in South American fish oil pushed domestic feed producers to substitute poultry fat into their formulations, and that substitution drove a sharp lift in poultry fat demand across Europe.

The price result followed. Poultry fat with a maximum 2% free fatty acid (FFA) content, a measure of how much the fat has degraded, was quoted at €1,200-€1,220 per tonne DDP Northwest Europe. Higher-FFA cargoes carried a discount.

Here is the animal fat snapshot for the week:

• Poultry fat, 2% FFA: €1,200-€1,220 per tonne DDP Northwest Europe
• Poultry fat, 5% FFA: roughly €1,100-€1,120 per tonne, a €100 per tonne discount to the cleaner grade
• Broader Category 3 animal fat complex: up approximately €10-€30 per tonne on the week, a 1-3% rise

For context, Category 3 mixed and bone fats sat around €990-€1,040 per tonne DDP Northwest Europe earlier in 2026, with some July 2026 readings breaking above €1,100 per tonne on strong demand. The current levels extend that climb.

Why dual-sector demand matters

The fish oil substitution dynamic changes how you should read poultry fat strength. This was not purely a biofuel bid.

Poultry fat was being pulled by feed and fuel sectors simultaneously, which means the price support is broader, and potentially more durable, than a single-sector rally would be.

That dual pull is the critical context for anyone assessing whether animal fat strength holds. When two sectors compete for the same tonne, the risk calculus around a pullback shifts. A cooling in biodiesel margins alone would not necessarily unwind the demand if feed buyers are still short of fish oil.

Geopolitics and gasoil futures set the ceiling for the entire feedstock complex

None of this is a European domestic story. The ceiling for the whole feedstock complex was set several steps upstream, in refined product markets rattled by Middle East conflict.

The macro anchor: ICE front September gasoil futures reached $1,464 per tonne on 10 September 2026, with front-month values pushing toward $1,477 per tonne by mid-month.

Ongoing Middle East conflict has tied oil security premiums tightly to refined product curves, tightening the gasoil market and feeding heavy volatility into ICE futures. The transmission from that macro shock down to a UCO bid in Rotterdam runs in a clear sequence:

• Elevated gasoil benchmarks lift outright biodiesel prices across Europe
• Higher biodiesel output prices widen the UCOME-UCO production spread
• Wider spreads give producers the room to raise feedstock procurement bids

That chain is why the $400-plus per tonne spread this week matters so much. It is the conduit that turned a geopolitical security premium into higher prices for used cooking oil and animal fat. A separate channel reinforced the direction: higher vegetable oil futures lifted raw feedstock values independently of the biodiesel margin calculation.

The practical implication for anyone in this market is uncomfortable. Any de-escalation in the Middle East that relieves the crude and refined product security premium would compress biodiesel margins and pull away the mechanism currently supporting elevated feedstock bids.

That is the key point. European feedstock prices are not insulated from macro risk events, which means ICE gasoil futures deserve monitoring as a leading indicator, not just domestic supply and demand data.

The ICE gasoil futures structure, including the backwardation or contango shape of the forward curve, carries significant implications for biodiesel economics beyond the outright price level; a curve moving from backwardation toward contango changes the hedging calculus for producers who lock in feedstock costs against forward biodiesel sales.

Advanced feedstocks and trade flow shifts complicate the medium-term price picture

The weekly narrative is bullish. The medium-term picture is not simply an extension of it.

Several structural forces are building that could cap or reverse the rally, and they start with the advanced feedstock tier that producers are increasingly turning to. Interest is shifting toward Annex IX A alternatives as producers try to escape the Annex IX B cap constraint.

The advanced and specialty snapshot for the week:

• Food waste oil (FWO): selling ideas around $1,445-$1,470 per tonne FOB, with no confirmed transactions reported
• Soap stock acid oil and palm oil mill effluent (POME): buyers in Spain and Italy willing to pay premiums above ARA levels
• Crude tall oil (CTO), technical corn oil (TCO), and cashew nut shell liquid (CNSL): rising structural interest as producers diversify away from capped feeds

The regulatory patchwork building against traditional feeds

National implementations of the EU Renewable Energy Directive III (RED III) have created a fragmented map that erodes demand for traditional UCO and animal fat in key markets.

The anti-dumping duties came in under Commission Implementing Regulation (EU) 2025/261 and apply to finished biodiesel rather than raw UCO, but combined with strict fraud verification they have steered demand toward trusted domestic and regional supply.

Commission Implementing Regulation (EU) 2025/261 imposed definitive anti-dumping duties on Chinese biodiesel imports at rates ranging from approximately 10% to 35.6%, targeting finished biodiesel rather than raw feedstocks, which steered European procurement toward trusted domestic and regional supply chains.

The Brazilian supply wild card

The other force building against the rally is a trade flow reroute. A new 37.5% US tariff on Brazilian tallow, introduced in July 2026, is redirecting Brazilian fat away from the United States and toward Europe.

Some European buyers are already holding off on Q4 2026 purchases in anticipation of that additional supply, a caution that could soften Category 3 prices if it spreads. Brazilian UCO exports fell roughly 72% year-on-year between January and July 2026, according to trade data that has not been independently confirmed, largely on a collapse in US shipments.

The 37.5% US tariff on Brazilian tallow did not emerge in isolation; the broader tallow trade disruption reshaping global fat flows was already underway before the July 2026 measure, as policy shifts in multiple jurisdictions simultaneously redirected Category 3 supply away from established export corridors.

The European Waste-based & Advanced Biofuels Association (EWABA) has argued the Annex IX B cap no longer reflects the expanded feedstock base and structurally limits price upside for UCO and tallow. Put the regulatory patchwork and redirected Brazilian supply together, and the current rally carries identifiable headwinds that could surface in Q4 2026. Any procurement or hedging strategy built on today’s price levels should account for them.

What the week’s moves signal for Q4 2026 and beyond

Strip the week back to its core and the dynamic is simple: elevated gasoil futures plus wide UCOME-UCO spreads created a rational, margin-backed bid for feedstocks. That bid is real. It is also contingent on the Middle East risk premium staying in refined product markets.

Three variables will most determine where prices head into the final quarter:

1. ICE gasoil futures trajectory, driven by geopolitics. This is the mechanism holding margins wide, so it deserves top billing.
2. The pace and volume of Brazilian tallow and biodiesel arriving in European ports, driven by redirected trade flows and the US tariff.
3. National implementation of RED III double-counting changes in Germany, the Netherlands, and France, driven by policy.

Beneath the short-term price swings, a structural shift is accelerating regardless of direction. Producers are diversifying toward Annex IX A advanced feedstocks to escape the Annex IX B cap and reduce exposure to policy risk in individual member states.

The structural target: RED III sets a 5.5% advanced feedstock sub-target by 2030, with a 1% minimum for renewable fuels of non-biological origin. That destination is fixed even as weekly prices move.

The takeaway for anyone tracking this space is that September 2026 is a moment of unusual tension where macro, policy, and trade flow forces are all live at once. The UCOME-UCO spread would need to compress materially before procurement behaviour changes, so watching all three variables, not just headline prices, is what sound positioning requires now.

For readers wanting to place this week’s moves within the broader 2026 market context, our full explainer on biofuel feedstock price dynamics in 2026 covers the structural supply and demand forces that have set the stage for the current price environment.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors. Certain figures cited reflect market assessments that have not been independently confirmed.