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Increasing US demand for soyabean oil driven by biodiesel policies will continue to hold back exports of the commodity in the 2023/24 marketing year, according to a report by the United States Department of Agriculture (USDA).

The resulting trade gap would push the USA out of the global soyabean oil export market the October Oilseeds: World Markets and Trade report said.

US production of renewable diesel has increased significantly in recent years and although new crushing facilities and expansion of existing facilities could increase domestic supplies of soyabean oil, higher biomass-based diesel demand in the USA has caused major shifts in vegetable oil imports, according to the report.

A leading soyabean oil exporter until recently, the USA’s shipments peaked at 1.5M tonnes in 2009/10 and averaged1M tonnes between 2010-2021.

In 2022/23, US soyabean oil exports fell drastically to 0.2M tonnes while soyabean oil imports exceeded exports, making the USA a net importer of soyabean oil for the first time.

The shift in trend came as the US Environmental Protection Agency (EPA) finalised higher multi-year biofuel blending targets.

“The change in biofuel policies also lured imports of other feedstocks such as canola oil, tallow, and used cooking oil (UCO). US canola oil imports have skyrocketed in 2022/23 and are projected to grow even further in 2023/24,” the USDA said.

The share of Canadian canola exports shipped to the USA increased from an average 56% from 2018-2021 to 88% in the first eight months of this year. Other importers, such as China, had shifted to rapeseed oil imports from Russia and Belarus instead of Canada. In 2023/24, US rapeseed oil imports were projected to reach a new record of 3M tonnes.

“Higher domestic vegetable oil prices and a strong US dollar encouraged imports of UCO to meet domestic biofuel demand,” the USDA said.

Imports of commodities under harmonised system heading 1518.00 – covering processed animal, vegetable oils and industrial preps not specified elsewhere (nesoi) – in the 2022/23 marketing year (October-August) reached almost 882,000 tonnes, with a value of nearly US$1.2bn. The majority of those imports came from China (37%) and Canada (27%).

The USDA said it expected this trend to continue into the next marketing year.