The growing US demand for soy oil, driven by biodiesel policies, will continue to curb exports of the commodity in the 2023/24 marketing year, according to a report from the United States Department of Agriculture (USDA).
The resulting trade gap would push the U.S. out of the global soybean oil export market, according to the October Oilseeds: World Markets and Trade report.
U.S. production of renewable diesel has increased significantly in recent years, and while new crushing facilities and expansion of existing facilities could increase domestic soybean oil supplies, increased demand for biomass-based diesel in the U.S. has caused major shifts in imports. of vegetable oil, according to the report.
A leading exporter of soybean oil until recently, US shipments peaked at 1.5 million tonnes in 2009/10 and averaged 1 million tonnes between 2010 and 2021.
In 2022/23, US soybean oil exports fell sharply to 0.2 million tonnes, while soybean oil imports exceeded exports, making the US a net importer of soybean oil for the first time.
Changes in biofuel policies boost imports
The trend change came as the U.S. Environmental Protection Agency (EPA) finalized higher multi-year biofuel blending targets.
“The change in biofuel policies has also attracted imports of other raw materials such as canola oil, tallow and used cooking oil (UCO). US canola oil imports soared in 2022/23 and are expected to grow further in 2023/24,” the USDA said.
The share of Canadian canola exports has increased, however. After all, between 2018 and 2021, it averaged 56% for the US. In the first eight months of this year, it reached 88%. Other importers, such as China, began importing rapeseed oil from Russia and Belarus instead of Canada. In 2023/24, US rapeseed oil imports were projected to reach a new record of 3 million tonnes.
Domestic vegetable oil prices are higher. The strengthening US dollar encourages UCO imports. The USDA said this meets domestic demand for biofuel.
In 2022/23, imports of commodities in heading 1518.00 of the harmonized system were significant. At almost 882,000 tons, they reached a value of almost US$ 1.2 billion. Most of these imports came from China (37%) and Canada (27%).
The USDA said it expects this trend to continue into the next marketing year. Therefore, the dynamics of rapeseed oil exports and imports have been undergoing significant changes in recent years, influenced by several factors, such as the strengthening of the US dollar and the search for alternative suppliers by other countries, such as China, which has impacted Canadian exports.
Source: Oils & Fats International
