On the one hand, Argentina is once again consolidating its position as the leading exporter of soybean oil and meal after a good 2023-24 harvest, which is crucial for the recovery of its domestic soybean supply, disrupted in previous seasons by drought. On the other hand, Brazil is betting on energy transition as one of its engines of growth and expanding its biofuels policy, reducing feedstock exports to meet national supply levels, and thus reducing availability for the global market.

Tighter margins due to falling agricultural product prices, delayed planting due to warmer-than-normal conditions in Brazil and new regulations are the challenges that mark the start of the 2024-25 season in South America. At the same time, the biofuels agenda is taking off with the implementation of mandates for sustainable aviation fuel (SAF) and the expansion of biofuels policies worldwide, intensifying the competition for feedstocks in the global arena.

Soybean oil price and production outlooks amid policy and climate changes in South America

Sharp declines in agricultural commodity prices have marked the 2024 season. Fastmarkets’ price assessment of crude-degummed soybean oil in central Illinois went from an average of 48.4 in January to an average of 42.55 cents per pound in September, a 12 percent drop. The soybean oil future contracts in the Chicago Mercantile Exchange (CME) dropped by the same magnitude in the same period, reaching the lowest level since December 2020 and reflecting a loosened supply.

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On the one hand, Argentina is once again consolidating its position as the leading exporter of soybean oil and meal after a good 2023-24 harvest, which is crucial for the recovery of its domestic soybean supply, disrupted in previous seasons by drought. On the other hand, Brazil is betting on energy transition as one of its engines of growth and expanding its biofuels policy, reducing feedstock exports to meet national supply levels, and thus reducing availability for the global market.

Tighter margins due to falling agricultural product prices, delayed planting due to warmer-than-normal conditions in Brazil and new regulations are the challenges that mark the start of the 2024-25 season in South America. At the same time, the biofuels agenda is taking off with the implementation of mandates for sustainable aviation fuel (SAF) and the expansion of biofuels policies worldwide, intensifying the competition for feedstocks in the global arena.

Soybean oil price and production outlooks amid policy and climate changes in South America

Sharp declines in agricultural commodity prices have marked the 2024 season. Fastmarkets’ price assessment of crude-degummed soybean oil in central Illinois went from an average of 48.4 in January to an average of 42.55 cents per pound in September, a 12 percent drop. The soybean oil future contracts in the Chicago Mercantile Exchange (CME) dropped by the same magnitude in the same period, reaching the lowest level since December 2020 and reflecting a loosened supply.

Speak with us today to view the latest price data and forecasts

In 2024, Argentina harvested a record-breaking soybean crop that was crucial to replenishing its domestic inventories, which were way below the historical average due to the drought-reduced crop of the prior year. Argentine crushers recovered their crushing volumes to the historical average at the beginning of the year, which was key to re-establishing the Argentine position as the leading exporter of soybean oil.

The price drop in the soybean complex through 2024 is a market response to the large crops produced in the Americas since 2023. Brazil has been growing crops for above 150 million tons since the 2022-23 season and the US has had crops of above 115 million tons for the last two marketing years. The United States Department of Agriculture (USDA) data suggests that the global stocks-to-use ratio is up from 15 percent in 2021-22 to 16.6 percent in 2023-24, forecasting another increase to 18.7 percent in 2024-25.

For the next season, Fastmarkets expects Argentina and Brazil to produce 19 million tonnes of soybean oil, three million tonnes above the year before.

The 18 percent increase in soybean oil production is driven primarily by the recovery of the Argentinian crushing industry, which Fastmarkets expects to increase its soybean oil production by three million tonnes to 8.2 million tonnes.

In contrast, Brazil is expected to grow marginally in its soybean oil production in 2024 at 10.8 million tonnes but significantly increase its biofuel feedstock domestic demand.

Biodiesel industry feeding soybean oil demand

Fastmarkets expects that biodiesel production will grow 20 percent in 2024 and forecasts a growth of 11 percent in 2025.

The strong demand for soybean oil by the Brazilian biodiesel industry has already impacted domestic prices, narrowing the spread between Fastmarkets’ price assessment of soybean oil in the US Gulf and Brazil, which dropped from an average of 19.5 in the first nine months of 2023 to 5.54 cents per pound in the same period of 2024.

The relative movement of soybean oil prices in Brazil compared to the US reflects the biodiesel industry’s sharp increase in soybean oil usage in South America, providing fewer incentives for soybean oil exporters to sell it to the global market.

The Brazilian government recently passed the bill “Fuels of the Future,” the most significant adjustment to biofuel policy since the 1980s, establishing a robust framework for industry growth in the coming years with biodiesel mandates increases and the creation of SAF mandates.

Soybean oil accounts for 70 percent of the industry’s feedstock mix, and with the biodiesel mandate increasing to a B14 in March 2024, with further increases up to a B20 in 2030, and a one-percentage-point increase per year as announced by the government, Fastmarkets expects significant changes in the Brazilian market dynamics.

If Brazilian soybean crushing capacity remains at 56 million tonnes per year by 2026, which would imply that recent announcements of capacity expansion don’t exist, Fastmarkets expects that the country will become a net importer of soybean oil due to the increase in biodiesel demand. It is worth noting that last year, Brazil was the second leading soybean oil exporter, exporting 2.3 million tonnes, highlighting the significant changes in the market dynamics.

Fastmarkets’ analysis of recent announcements of investments in expanding capacity shows that Brazilian crushing capacity will increase by seven percent to 60.7 million tonnes per year by the end of 2026. If the announced facilities become operational, the country will remain a net exporter of soybean oil, but with significantly lower volumes. If the anticipated crushing capacity is not operational in 2026, Fastmarkets expects Brazilian soybean oil users to source soybean oil from Argentina and replace soybean oil as feedstock with other feedstocks.

As the biomass-based diesel (BBD) industry grows in the two primary soybean-producer countries (the U.S. and Brazil), significant shifts in the feedstock trade flow will happen. Like the US, which has been exporting significantly lower volumes over the last few years, Brazil is likely to curb its shipments.

If the Brazilian industry investments in second-generation biofuels (renewable diesel and sustainable aviation fuel) increase sharply in the coming years and drive domestic feedstock demand further, then the Brazilian exportable surplus of feedstocks will lower.

The growth of the Brazilian BBD industry reinforces Argentina’s position as the major soybean oil supplier for the global markets. As the biofuel industry grows, and therefore its feedstock demand, new challenges will appear in the market.

One of the challenges that the market will face with this sharp increase in the global soybean crush driven by the expansion of soybean oil demand is the destination of all the additional volume of soybean meal that will come along with soybean oil production. It is worth mentioning that when crushing beans, the process results in more than four times as much soybean meal by weight as soybean oil.

As crushers are expanding their capacity driven by the new demand that is expected by the BBD industry, soybean oil prices will have to move higher relative to soybean meal as meal demand is not likely to grow as much as feedstock demand.

As the oil share is below 50 percent, soybean meal is the main component, which accounts for around 60 percent of the soybean crusher’s revenue and, therefore, the driver of the crushing volume. Soybean meal demand has been strong in 2024, and one question to understand the market is: How long will the global market be able to absorb this extra soybean meal volume?

Fastmarkets estimates that soybean meal exports from Argentina, Brazil, and the U.S. will grow 19 percent in 2023-24, mostly driven by the recovery of Argentina, which will add more than 5.9 million tonnes of soybean meal exports to the previous season.

Although fundamentals have weighed on soybean oil prices in 2024, Fastmarkets believes that the growth of soybean oil demand will outpace the growth of soybean meal due to the sharp expansion of the global BBD production capacity. At some point, the growth in global demand for BBD feedstock will drive the oil share above 50 percent, pushing crushers to match crushing volumes to soybean oil demand rather than soybean meal demand, which has traditionally driven crushing volumes.

The tight stocks in the feedstocks market in the US, the growing demand of the global BBD industry, and the shift in the market make it seem evident that oil share will need to rise above 50 percent to keep the BBD feedstock market supplied. However, the timing of the potential move is less obvious.
Fastmarkets’ current prediction suggests oil share will rise above the critical level in the late spring or early summer of 2025. However, it has been apparent for the last couple of years that oil share would need to move above 50 percent as feedstock demand grew, and other than a short period in 2022, oil share has remained stubbornly low relative to where many analysts thought it would be heading into 2025.

While 2025 is ahead of us, at Fastmarkets we are aware that soybean oil price and production trends will remain unsteady amid South American policy and climate changes.

Why use Fastmarkets soybean oil price and production forecasts

Our soybean oil price and production forecasts are built on a comprehensive, data-driven approach that combines a deep analysis of relevant market indicators with a clear understanding of supply trends.

We take into account a wide range of factors, including historical price data, seasonal production patterns and evolving supply and demand dynamics, as well as the latest policy and climate changes impacting key South American producers. This holistic perspective allows us to capture both immediate and long-term market influences, providing you with insights that are closely aligned with real market conditions.

Our insights are designed to help you negotiate futures contracts more effectively and mitigate potential risks associated with volatility with a clearer view of anticipated price movements.

Speak with us today and find out more

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The importance of renewable diesel

Renewable diesel is a type of biofuel that serves as a direct replacement for conventional petroleum diesel. Unlike biodiesel, renewable diesel is chemically identical to regular diesel and can be used in any diesel engine without modifications. It is produced through hydroprocessing technology, where waste oils and fats are refined to create a cleaner-burning diesel with lower greenhouse gas (GHG) emissions.

Used cooking oil: A prime feedstock

UCO is waste oil collected from the food service industry, including restaurants, commercial kitchens, and food processing plants. Traditionally, UCO is treated as waste, often disposed of through methods that can harm the environment. However, it is increasingly recognized as a valuable resource for renewable diesel production due to its lower carbon intensity than conventional feedstocks.

Environmental benefits

Utilizing UCO for renewable diesel production offers several environmental advantages.

Reusing UCO helps reduce the amount of waste that would otherwise end up in landfills or sewage systems. UCO-based renewable diesel results in lower GHG emissions than those produced from virgin vegetable oils or animal fats.

Renewable Identification Numbers (RINS)

The Renewable Fuel Standard (RFS) established by the United States Environmental Protection Agency (EPA) uses RINS to promote the integration of renewable fuels like renewable diesel into the national fuel supply. RINS are credits that track renewable fuel production and usage within the marketplace. Each RIN is generated when renewable fuel is produced and can be traded to help refiners and importers meet their renewable volume obligations.

How RINS work

When renewable fuel is produced, RINS are generated. Each gallon of renewable diesel, ethanol, or biodiesel is assigned a unique RINS number.

Upon blending renewable fuel with petroleum-based fuel or at the point of sale, the RINS can be ‘separated’ from the physical fuel. The separated RINS can then be traded independently on the RIN market.

Refiners and importers of petroleum fuels, or obligated parties, must acquire a set amount of RINS to meet their renewable volume obligations (RVO) each year. They must purchase RINS to make up the difference if they produce or import insufficient renewable fuels.

The value of RINS is determined by market supply and demand. If renewable fuel production increases, more RINS will be available, potentially lowering their price on the market.

Low carbon intensity feedstock and RINS

Using low carbon intensity feedstocks like UCO enhances the value of RINS due to the lower lifecycle greenhouse gas emissions associated with these materials. UCO-based renewable diesel generates lower-carbon RINS, recognized within the EPA’s RFS program as a more beneficial renewable fuel due to its reduced environmental footprint.

California Low Carbon Fuel Standard (LCFS)

In addition to the federal RFS program, California has implemented its own Low Carbon Fuel Standard (LCFS) to reduce further the carbon intensity (CI) of transportation fuels used within the state. The LCFS sets annual CI targets that decrease over time, incentivizing the use of low-carbon fuels.

Additional credits from the LCFS

Under the LCFS, fuel producers generate credits when they produce and sell fuels with a carbon intensity lower than the state’s benchmark. Each credit represents one metric ton of CO2 equivalent reduced.

Similar to RINS, LCFS credits can be traded on the open market. Producers of low-carbon fuels can sell their excess credits to other fuel providers who need them to comply with LCFS requirements.

Value of UCO

Using UCO further enhances the value of LCFS credits due to its low carbon intensity score. The lifecycle assessment of UCO accounts for the waste diversion from landfills and the energy used in its collection and processing, resulting in a lower overall CI.

Synergies between RFS and LCFS

Producers utilizing UCO can benefit from the RFS and LCFS programs by receiving RINS and LCFS credits. This synergistic effect maximizes the financial and environmental benefits.

As previously noted, low-carbon-intensity feedstocks like UCO produce more valuable RINS, positively influencing the profitability of renewable diesel operations.

LCFS credits augmentation

By generating LCFS credits, renewable diesel producers in California can gain additional revenue streams, further incentivizing the use of low-carbon feedstocks such as UCO. Together, these programs provide a robust framework that promotes the production and usage of renewable diesel with significant environmental benefits.

Economic advantages for producers

The dual benefits of RINS and LCFS credits enhance the economic viability of renewable diesel, especially when using low-carbon-intensity feedstocks like UCO. Here’s how these mechanisms bolster industry profitability.

Producers can realize higher returns due to the increased value of low-carbon RINS. The elevated market price for these RINS provides a substantial economic incentive to incorporate UCO in production.

LCFS credits offer an additional revenue stream, making it more attractive for producers to exceed the required carbon intensity reductions. These credits can be sold to other entities needing to meet their obligations under the LCFS program, creating a lucrative secondary market.

UCO is often cheaper than virgin oils and fats since it is a waste product. This cost differential can significantly lower the operating costs for renewable diesel producers, enhancing their overall profitability.

Challenges and opportunities for UCO

While there are numerous benefits to using UCO in renewable diesel production, the industry faces challenges, such as supply chain logistics, quality control, and competing uses.

Collecting, transporting, and processing UCO requires efficient logistics to ensure quality and minimize contamination. Developing robust supply chain networks can be capital-intensive but essential for scalability.

UCO can vary significantly based on its collection source and prior use. Ensuring consistent feedstock quality is critical for maintaining the high performance of renewable diesel.

UCO is also used in other industries, including animal feed and oleochemical production, which can create competition for this feedstock and impact availability and price.

Despite these challenges, the opportunities presented by leveraging UCO in renewable diesel production are significant. Technology and supply chain management advances can mitigate these issues and foster greater adoption of this practice.

Future outlook

The intersection of environmental policy and technological advancements positions UCO and other waste oils as pivotal in the future landscape of renewable diesel production.

Continued support and tightening of regulations under the RFS and LCFS will likely enhance the market dynamics favoring low-carbon-intensity fuels.

Advances in hydroprocessing and pretreatment technologies could improve the efficiency and scalability of converting UCO into renewable diesel. Innovations in catalyst and reactor designs may reduce processing costs and improve fuel yields, making the process more economically viable.

As other regions and countries adopt similar frameworks to the RFS and LCFS, the demand for low-carbon-intensity feedstocks like UCO is expected to rise, driving global markets towards more sustainable fuel solutions.

The use of UCO in renewable diesel embodies the principles of a circular economy. Businesses increasingly recognize the value of waste-to-fuel initiatives, which can transform environmental liabilities into economic assets.

Waste management and sustainable fuel production

Using UCO in the renewable diesel industry exemplifies an innovative approach to waste management and sustainable fuel production. This synergy between waste reduction and renewable energy production offers environmental benefits and significant economic opportunities for businesses and communities.

As we advance, the combined efforts of policy frameworks like the RFS and LCFS, along with technological innovations and public engagement, will be crucial in harnessing the full potential of UCO in renewable diesel production. By optimizing processes, enhancing collaboration, and promoting sustainability, the renewable diesel sector can effectively contribute to the global energy transition and a more sustainable future.

Ultimately, the dynamic interplay between waste reduction and renewable energy presents a model for future industrial practices, demonstrating how sustainable solutions can be economically viable and environmentally beneficial. Like other refining businesses, the cyclical nature of opportunity is market-based and consistently changes.

The renewable diesel industry can lead the charge toward a lower-carbon economy through strategic actions and continued innovation, setting a standard for other sectors.

View our used cooking oil prices

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According to a report released by the released by the International Energy Agency (IEA), the remaining one-third is expected to be covered by biodiesel and biojet fuel.

The primary driver for this surge in demand is emerging economies, the IEA said, particularly Brazil, Indonesia, and India, where robust biofuel policies, growing transport fuel demand, and abundant feedstock potential are key factors.

The most substantial growth in ethanol and biodiesel use is anticipated in these emerging regions.

In contrast, advanced economies like the EU, the US, Canada, and Japan are poised for more modest growth due to factors such as the increasing adoption of electric vehicles (EVs), improvements in vehicle efficiency, elevated biofuel costs, and technical constraints.

Notably, renewable diesel and biojet fuel are identified as the primary growth sectors in these advanced economies, according to the report.

In an accelerated growth scenario, demand is forecasted to nearly triple the main projection, driven by reinforced existing policies and the expansion of biofuel demand in new markets.

According to the IEA, the surge in renewable diesel and biojet fuel consumption, estimated at 18 billion liters during the forecast period, is expected to be dominated by the US and Europe, accounting for 80% of this increase.

Key drivers in the US include the Inflation Reduction Act (IRA), state-level low-carbon fuel standards, and Renewable Fuel Standard (RFS) blending obligations.

Meanwhile, Europe has approved the Renewable Energy Directive (RED III), aiming to double renewable energy shares by 2030.

However, IEA’s main forecast predicts modest growth in biofuel demand due to factors like the directive’s double-counting provision, declining transport fuel demand, and the increasing prevalence of electric vehicles and renewable electricity.

13% growth expected due to emerging economies

The forecast also anticipates a 13% expansion in ethanol and biodiesel consumption over the period, with growth in emerging economies offsetting declines in advanced ones.

According to the IEA, key contributors include Brazil’s goal to increase ethanol blending and India’s support for ethanol expansion through blending targets.

Biodiesel consumption is expected to increase primarily in Brazil, Indonesia, and Brazil, driven by increased blending requirements and rising diesel demand.

However, despite plans to encourage renewable diesel use in various regions, the main forecast indicates limited uptake.

Alongside that, over 60% of the global biofuel demand and production growth is expected to occur in Brazil, Indonesia, India, and Malaysia, according to the report.

These countries share common growth drivers, including comprehensive policies, abundant feedstocks, high oil import dependence, and increasing transport demand, making biofuels a prominent feature in their GHG emissions reduction plans.

These factors are expected to propel biofuel expansion throughout the forecast period.

Keep up to date with the industry news, price data, and forecasts by checking our biofuels market page.

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The move underscores the growing significance of UCO in the biofuel supply chain and the rise in rival demand centers that is teasing established flows away from European destinations and towards emerging demand centers such as the US Gulf. 

In 2020, China’s biggest UCO buyers were Spain (206,142 tonnes) and the Netherlands (246,921 tonnes), taking half of the total exported volume of 917,625 tonnes.

The numbers increased further in 2021 and 2022 to 431,075 tonnes and 321,875 tonnes for Spain and 210,583 tonnes and 415,002 tonnes for the Netherlands, while China’s total exports rebounded after the Covid-19 pandemic to 1.14 million tonnes and 1.58 million tonnes respectively.

Despite Europe’s growing biofuels production and feedstock demand, the flow to Spain and the Netherlands decreased to 139,161 tonnes and 214,233 tonnes respectively during the January-November period of 2023, with trading activity switching to the US and Asian destinations.

Legislation drove demand for Chinese UCO to the US

The US only turned to Chinese UCO in 2022, when it picked up a total of 47,550 tonnes of the material, followed by a further volume increase in 2023, with 689,714 tonnes of Chinese UCO imported in January-November.

That came as legislation designed to counter the impact of inflation and kickstart a new biofuels age came into effect across the US – the Inflation Reduction Act – bringing clear incentives to invest in production of renewable diesel. 

UCO imports to the US were boosted as a result of a waste-based feedstocks demand increase, which currently stands at 19.7 million tonnes, while the country’s local supply only meets 8.2 million tonnes of the need.

Biofuel demand drove Chinese UCO to Asia

China’s UCO shipments also increased to Singapore – home of Neste’s Singapore biorefinery, which had its production capacity increased to 2.6 million tonnes per year – with 295,498 tonnes imported in 2021 and 317,911 tonnes in 2022, compared with just 87,874 tonnes shipped in 2020.

Singapore imported 351,552 tonnes of Chinese UCO within 11 months of 2023, exceeding the previous year’s figure as Finnish oil refining company Neste expanded its hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) production at its local biorefinery.

Of the 2.6 million tonnes nameplate capacity, the company has said the facility should be able to produce 1 million tonne of sustainable aviation fuel as part of its output.

Finally, Indonesia’s UCO imports from China jumped to 118,791 tonne in 2023, up 95% from last year’s 42,283 tonne, while Malaysia’s imports reached 105,802 tonne in 2022 but then dropped to 59,178 tonne in 2023.

View our used cooking oil prices

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Indonesia had submitted a second request for the establishment of a panel to determine whether countervailing duties imposed by the EU on biodiesel imports from Indonesia were in line with WTO rules.

This was after Indonesia’s first request for a panel was not accepted by the EU, with the bloc’s representatives saying at the DSB meeting on October 26 that it was ‘not ready to accept the establishment of a panel and that it firmly believes the measures taken are fully justified and confident they were in line with WTO law.’ 

Indonesia had in August requested WTO dispute consultations with the EU regarding the bloc’s imposition of duties on biodiesel imports from the country and moved to request the establishment of a panel after the consultation failed to reach an agreement.

The EU had in 2019 imposed countervailing duties of between 8-18% for Indonesian biodiesel imports, with the measure expected to remain in place to December 2024.

Indonesia seeks to reverse the palm oil export trend to the EU

Indonesian biodiesel is largely palm oil-based, and the EU is Indonesia’s third largest destination market for palm oil products, though that market share has been shrinking with the bloc looking to reduce its imports of palm oil products due to links with deforestation.

Following the imposition in 2019, biodiesel exports to the EU from Indonesia had fallen by 95.4% to around 23,000 tonne, according to data from the country’s statistics agency, while overall biodiesel exports fell by 97% to around 34,000 tonne.

Overall biodiesel exports out of Indonesia, however, have increased year on year in the last three years, with exports in 2022 hitting around 436,000 tonne from 181,000 tonne.

This is also in line with Indonesia’s production capacity expansion, which is estimated to exceed 14.8 million kilo tonnes (17 million kilolitres) in 2023.

This is also in spite of Indonesia’s domestic biodiesel programme expansion, which was raised from B30 to B35 earlier this year, where 35% of palm-based biodiesel is blended with 65% of gasoil.

For the DSB panel, the WTO said that The United States, the United Kingdom, Norway, the Russian Federation, Thailand, Singapore, Japan, Canada, China, Argentina and Turkey reserved their third party rights to participate in the panel proceedings.

View our biofuel feedstock prices

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A ‘grand challenge’ launched by Joe Biden’s government in late 2021 is intended to encourage production of 3 billion gallons of SAF by 2030, and then increasing production tenfold to 35 billion gallons over the next two decades.

However, the research suggests that the country only has feedstock capacity to produce 21.7 billion gallons of theoretical SAF production, but only 12.2 billion gallons would come from biomass sources deemed to be sustainable.

The report defined sustainable biomass as any feedstock “without adverse market and environmental consequences.”

Examining the 2030 target of 3 billion gallons through four low-risk to high-risk feedstock and technology scenarios, the report determined that under all four scenarios the target was feasible.

At the lowest risk end – where technology already exists and supply is already being produced – ICCT estimated that production is likely to reach just over 3 billion gallons by 2030.

Around 40% of that output would reflect waste-based hydroprocessed esters and fatty acids (HEFA) with the balance coming from second-generation cellulosic production that typically uses non-food parts of plants or municipal city waste.

A high-risk production scenario, using waste and crop-based HEFA, second generation cellulosic fuels and conventional alcohol-to-jet (AtJ) technologies could see production ramp up to just short of 7 billion gallons by 2030, according to the report.

However, the dramatic ramp up in mandates to 35 billion gallons would likely be out of the reach of all forms of US feedstocks and would fall significantly short of target when non-sustainable feedstocks are exclusively deployed.

“In total, we find that the United States has approximately 21.7 billion gallons of theoretical SAF production from available biomass, but only 12.2 billion gallons of that is from sustainably available biomass,” the report said.

The report also noted that the current tax incentives, also introduced by the Biden administration to encourage investment in SAF production, only run out to 2027.

“Without a long-term price signal, SAF developers will lack sufficient incentive to invest in projects from less-tested, advanced fuel pathways,” the report warned, concluding that technology delays will likely blunt early production potential.

Pathways reliant upon HEFA production – an advanced form of renewable diesel – will be highly resource constrained, while AtJ pathways are likely to be expensively prohibitive in the near term.

Available resources and sustainability

In feedstock terms, the two biggest available resources – corn grain and soybean oil – will both largely fall short of the threshold required to be deemed sustainable, with both failing to meet the 50% life cycle GHG reductions that are required under the main compliance scheme, CORSIA.

When pushing on from the 2030 target, the report calculated the biggest single contributor to the SAF production pool stood to be corn grain ethanol, with 43.9 million tonneds of feedstock likely to be able to deliver around 6.9 billion gallons of SAF, at a conversion factor of just under 50%.

However, that would equate to virtually the entire supply of US corn ethanol currently heading into the road fuel mix, while the second place feedstock – soy oil – likely to be able to contribute a maximum 15.3 million tonnes at a 100% crush rate

That would yield 2.67 billion gallons of SAF, but both would find it difficult to contribute under current GHG reduction compliance requirements.

Of the feedstocks that are deemed to be sustainable, agricultural residues could contribute 161.1 million tonnes of feedstock and 4.88 billion gallons of SAF, while next best option was energy crops, that could produce 2.72 billion gallons of SAF from 89.7 million tonnes of feedstock.

Animal fats were identified as the most productive feedstock, with 500,000 tonnes of feedstock resulting in 420 million gallons of SAF, followed by corn oil where 700,000 tonnes of feedstock could produce 370 million gallons.

“Approaching the long-term SAF target would require substantial diversion of feedstock from other economic sectors,” the report notes, and called for incentives to be “extended and expanded” post-2030.

“There is insufficient biomass to meet the long-term 2050 target… the current set of policies in place are insufficient to expand SAF deployment beyond 3 billion gallons,” the ICCT said.

The report tap into the mounting concerns around the ambitious SAF mandates that both the US and the European Union have set out as they attempt to decarbonise the hard-to-abate aviation section.

With other parts of the world also looking at their waste-based and vegetable oil feedstock slate, and competition for feedstocks intensifying, meeting these targets will require significant investment and securing of relevant feedstocks.

The EU is looking to ensure 70% of its entire aviation supply uses SAF by 2050, up from 0.03% as of 2020.

View our feedstock prices

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The USDA, in its Biofuels Annual Report, published on September 1, claims that Neste received virgin palm oil volumes from Indonesia, which it said were exported fraudulently as UCO via China.

Neste’s reaction

“Neste’s recent analyses of UCO received from China do not support the USDA’s assertions, hence the company believes that the reference to Neste in the USDA report is either a mistake or based on a misunderstanding,” Neste said in a statement on Friday, adding that the claims were “unsubstantiated.”

The biofuels producer added that it takes suspected fraud cases “seriously and investigates them accordingly.”

“In addition, the company continuously evaluates the quality and authenticity of the raw material volumes it receives, conducting thorough laboratory analyses of the samples of UCO volumes it receives to its terminals from China,” Neste said.

The producer said it would subsequently contact the appropriate authorities at the USDA to discuss and learn more about the assertions in the report.

View our UCO price data

UCO imports from China

The hit back from Neste comes several months after the European Commission said it was investigating a complaint from a member state about possible fraud relating to biofuel imports from China.

The Commission’s acknowledgment of the complaint and call for cooperation fully with the investigation follows the influx of Chinese-sourced waste-based biodiesel through the early part of this year that has swamped key European markets and was accused of harming domestic production of both waste-based and conventional biofuels – physical prices collapsed across the EU.

Trade sources in June told Fastmarkets Agriculture that domestic biodiesel production had “pumped up in China,” this year, splitting Chinese UCO flows between the export market and new domestic processing capacity.

A similar ramp-up in sophisticated renewable diesel (RD) capacity across the US means the country has been pulling more and more of China’s UCO flows in as a feedstock, cutting flows of the feedstock to the EU – but the US has limited use for the finished grade UCOME.

“The US doesn’t want it [UCOME], so half China’s UCO is heading to the US and the other half to Chinese production which is then being exported [as finished product],” the source said.

Neste meanwhile restarted RD production at the expanded part of its Singapore plant in early August.

The production line initially started up in April, increasing annual production capacity to 2.6 million tons (mt), of which up to 1 million mt was intended to be sustainable aviation fuel (SAF).

However, the facility was shut down in June due to unexpected equipment repairs, which the company said in July would affect RD and sustainable aviation fuel (SAF) sales volumes in the second half of 2023.

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The data, released August 9, shows 1.5 billion RTFCs had been issued up to early July, substantially above the 659 million tickets that had been revealed in the first provisional 2022 figures released a year earlier.

The total volume of renewable fuel supplied has jumped 73% to 1.97 billion liters, and RTFCs have already been issued against 925 million liters – more than double the 400 million liters at the same point of 2022.

However, the delivery of fuels that have earned development status – usually fuels derived from household wastes or comprised of hydrogen or synthetic biogases – came in at 2 million certificates issued, broadly the same figure as at the same stage of 2022.

The data shows the feedstock was end-of-life tires from Poland, Sweden and Turkey that delivered 460,000 liters of development petrol and 644,000 liters of development diesel.

That was overall a 41% increase compared with 385,000 liters of development diesel and 395,000 liters of development petrol delivered at the same point in 2022, using the same end-of-life tires feedstock augmented by Polish food waste.

Biofuel contribution and categorization

Conventional biofuels reported a much bigger increase in contribution, with fuels categorized as using a general feedstock – often known as non-crop in the industry – increasing 130% to 594 million liters, 99.5% of which was derived using a double counting feedstock.

For 2022, 100% of the feedstock supply was deemed to be double-counted, but increased mandates and sharper competition for prized double-counted feedstocks is likely to undo some of the progress made under the renewable transport fuel obligation (RTFO).

That compares with a 130% increase in general biofuels, rising to 594 million liters, and a 134% increase in crop-based biofuels to 330 million liters year-on-year.

Used cooking oil (UCO) was the biggest single feedstock, with the equivalent of 380 million liters of renewable diesel supplied, while corn was the second biggest contributor listed as 186.5 million liters of ethanol.

View our article on UCO supply and traceability

The 2023 compliance year raises the blend mandate to 14.22% of the total fuel supply, of which 3.5% of the total supply can be derived from crop-based feedstocks.

Of the balance, 1.15% should be development fuels, with the remaining 9.6% labeled as general biofuels – typically sourced from waste-based feedstocks.

Typically the UK government provides updates on biofuel outlooks on a quarterly basis.

The post First cut of UK 2023 data shows RTFC issue tripled year-on-year appeared first on Fastmarkets.

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In addition, revised forecasts calling for short-lived heat in the Midwest corn belt also weighed on the front end of the market. More favorable growing conditions due to the prospects of cooler temperatures and increased chances for precipitation next week come at a time when soybean crops in the region move toward their peak pod-setting phase.

Nearby delivery August soybean oil futures settled at 67.60 cents per pound on Friday, down 101 basis points per pound, or 1.47 percent. The September contract was down 18 basis points per pound at the closing bell. December soy oil futures finished the session at 62.40 cents per pound, up 33 basis points per pound.

Despite the afternoon sell-off, soybean oil contracts farther out along the forward curve ended with slight gains but still well below session highs, underpinned by stronger crude oil prices and worries of tighter global supply. Tensions were heightened in the Black Sea region this week following a volley of air strikes between Russia and Ukraine. Russia pulled out of the Black Sea Grain Initiative early last week.

In Malaysia, palm oil futures ended the session and the week lower, amid ongoing strength in the ringgit. Still, worries that supply from the Black Sea could be choked off kept losses contained. The most actively traded palm oil futures contract (October) closed down 20 ringgit per tonne, or 0.5 percent, on Friday, just above 4,000 ringgit per tonne at 4,006 ringgit per tonne. On the week, the contract was down 0.72 percent in value.

Miller’s data suggested that palm oil production could be marginally higher for the full month of July.

The post Soybean oil futures succumb to late selling pressure appeared first on Fastmarkets.