US shifts to net soybean oil importer on biofuel boom: Foreign Agricultural Service

A surge in US biofuel demand will flip its domestic soybean oil trade and make it a net importer in MY 2023-24 (September-August) for the second consecutive year, the US Foreign Agricultural Service said Oct. 12

US soybean oil derivative exports for MY 2023-24 was estimated in FAS' latest report at 159,000 mt, against imports of 181,000 mt, again making the country a net importer of soybean oil. The US' consumption of soybean oil projection has also been revised upwards to 12.29 million mt from 12.02 million mt, primarily led by usage in biofuels.

According to the FAS, increased in renewable diesel production driven by low-carbon fuel mandates has led to growing domestic demand for soybean oil, suppressing exports and pushing US out of global export market. The US became a net importer of soybean oil for the first time in history in 2022-23 by a slight margin, when imports stood at 170,000 mt against exports of 168,000 mt. The shifts came amid higher Environmental Protection Agency multiyear biofuel blending targets.

The US Department of Agriculture in its World Agricultural Supply and Demand Estimates report, also released Oct. 12, projected increase domestic usage of soybean oil for biofuels to 12.8 billion lb from 12.5 billion lb over the USDA's September estimates.

According to data released Sept. 29 by the US Energy Information Administration, 1.273 billion lb of soybean oil went to US biofuels production in July, including 679 million lb consumed by biodiesel plants and 594 million lb consumed by renewable diesel producers. Total soybean oil consumption was at 1.207 billion lb in June, including 627 million lb consumed for biodiesel production and 580 million lb consumed for renewable diesel production, and at 956 million lb in July 2022, including 626 million lb consumed by biodiesel facilities and 331 million lb consumed by renewable diesel producers.

However, FAS cited new crushing facilities and expansion of existing facilities may increase domestic supplies of soybean oil. Domestic soybean crushing in US was pegged at 62.59 million mt in MY 2023-23, up from 60.19 million mt in the previous market year.

Soybean oil output was estimated at 12.25 million mt from 11.91 million mt year over year. The total supply of oil derivative was also up by almost 1 million mt, to 13.23 million mt.

According to theFAS report, incentive driven change in biofuel policies has also pushed purchase of other vegetable oil feedstocks such as canola oil, tallow, and used cooking oil.

"US canola oil imports have skyrocketed in 2022/23 and are projected to grow even further in 2023/24," the FAS said. "The share of Canada canola exports that went to the United States increased from an average 56% from 2018-2021 to 88% in the first 8 months of 2023."