#5 | Unintended Consequences

The U.S. imported a record amount of fats and oils in March, fueling a boom in renewable diesel production (literally).

Imports of heavy-hitter feedstocks used cooking oil, tallow, and canola oil have exploded in recent months, providing stiff competition for soybean oil. For the first 3 months of 2024, UCO+canola+tallow imports are up 50% vs last year & up 170% from 2022.

Can someone say unintended consequences?!

#4 | HOT Seat

While tallow and canola oil imports are on the rise, used cooking oil sits in the hot seat for two reasons.

First, the U.S. imported 3.1 billion pounds of used cooking oil in 2023 - a 255% increase from the year prior and up nearly 1000% from 2021. 

Second, China didn’t begin shipping the US used cooking oil in any meaningful quantity until last year when they sent more than 1.5 billion pounds our way - accounting for 51% of total import volumes in 2023.

China is flooding the U.S. with used cooking oil, causing an uproar among biofuel industry leaders who say perhaps it isn’t ‘used’ at all.

#3 | Winners & Losers

Last week we saw big moves in both soybean meal and soybean oil as the meal market made its largest one-week gains since mid-October on the back of labor strikes in Argentina - the world's largest exporter of meal.

In turn, oil suffered its worst weekly loss since late-October, amid oilshare unwind and energy market weakness.

#2 | Two weeks of buying

Corn, the soy complex, and all three wheats, combined, saw their largest two-week fund buying spree since June 2023 in the week ending April 30 as the overall net short decreased by more than 205,000 contracts.

A big week of buying in soybean meal, corn, and all three wheats offset a big increase in soybean oil's net short.

#1 | One big record

Soybean meal had a BIG month in March - in fact, the U.S. exported 1.65 million tons (nearly 70,000 semi trucks worth) of soybean meal - an all-time high record for any month.

Argentina’s 2022/23 drought that resulted in half a bean crop last year opened the flood gates for U.S. business, pushing Oct-Mar cumulative exports to a record 9.1 million tons (380,000 trucks-worth in case you were wondering).

Increased US crush capacity is also fueling this fire as we are producing more soybean meal than ever before. The challenge going forward, however, is balancing Argentina coming back online and resulting smaller crush margins with stagnant domestic demand.

We will be talking a lot about meal in the coming months as the crush industry experiences what are sure to be growing pains into the 2024/25 marketing year.

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