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The USA’s increasing use of hydrotreated vegetable oil (HVO) in renewable diesel production threatens Argentine exports, according to a report by the Rosario Stock Exchange (BCR) reported by Argentine newspaper Clarín.

With HVO consumption overtaking biodiesel use in the USA, the country had expanded its soyabean crushing capacity for the production of renewable diesel, which would lead to an extra supply of oilseed meal and a drop in pellet prices, the 24 January report said.

Driven by generous RIN (Renewable Identification Numbers) subsidies that made HVO competitive compared to fossil diesel, conversions of oil refineries to HVO production plants using mostly soyabean oil had increased significantly in the USA, the report said. This had led to an 88% increase in renewable diesel production from January-September 2022, compared to the same period the previous year.

According to the BCR report, conducted by Julio Calzada and Guido D’Angelo, HVO consumption in the USA in the first nine months of 2022 exceeded the total volume consumed in 2021 and was expected to close the year with a consumption of 5M-6M tonnes, with potential to reach 9M this year and close to 12M in 2024.

In the same period, 7% more HVO was consumed than biodiesel, the report said.

Against this backdrop, Argentina was concerned that increased soyabean processing in the USA to obtain soyabean oil for use as a feedstock in diesel production was accompanied by increased oilseed meal production, one of Argentina’s main agro-exports, Clarín wrote.

This extra supply would depress international prices for soyabean pellets, the report said.

According to BCR estimates, in the next five years, soyabean meal production in the USA could increase by more than 11M tonnes and its exports by more than 6.4M tonnes, in a world market that might not expand at the same rate.

“As long as this subsidy programme for environmental purposes and robust processing margins persist, this dynamic of productive growth in the US is expected to persist,” the report said.

According to data from the American Soybean Association, 13 new soyabean processing plants and the expansion of 10 existing plants have been announced in the USA.