US soyoil jumps as China cuts export incentive for competing biofuel feedstock

U.S. soyoil futures rallied 2% on Friday after China said it would cut export incentives for some products including used cooking oil, a low-cost feedstock that many U.S. biofuels makers use instead of domestically produced soyoil.

China’s finance ministry said it would reduce or cancel the export-tax rebates starting next month, including some refined oil products that traders said would include used cooking oil, or UCO.

The announcement was the latest wildcard for U.S. renewable fuels producers and feedstock suppliers following a presidential election win by Donald Trump, whose trade policies and domestic agenda could upend global trade flows.

China’s move also comes as global supplies of vegetable oils are tightening and prices climbing, analysts said.

December soyoil BOZ24 on the Chicago Board of Trade closed up 2% at 45.35 cents per pound after four days of losses that had dragged the market down from the seven-month peaks reached after the election.

Still, market analysts and vegoils traders caution that China’s move to cancel the export-tax rebates may only slightly curb U.S. imports of UCO, as it would likely remain among the cheapest feedstocks for many U.S. biofuels plants.

“It may not really impact the amount of UCO coming in as they will just price higher but yet below other feedstocks. There is so much room in the pricing, they can still get the big bulk business that they need,” said Kent Woods, owner of advisory firm CrushTraders.

“It’s more a gesture than a shift of usage flows.”

U.S. imports of used cooking oil were nearly double for the first nine months of 2024, compared to the same period a year ago, according to Census Bureau data.

More than half of all shipments originated from China, the data shows.
Source: Reuters (Reporting by Karl Plume in Chicago, additional reporting by P.J. Huffstutter in Chicago and Gus Trompiz in Paris; Editing by Jan Harvey and Rod Nickel)