Demand for the main oils in the United States for biodiesel production is on the rise

Demand for the main oils in the United States for biodiesel production is on the rise

The United States has sharply increased its imports of vegetable oils to supply its biodiesel industry. For the moment, this source is practically out of the soybean oil export market despite falling prices.

United States is in a process of major growth in the production of biofuels, in order to comply with the mandates of the US Environmental Protection Agency (EPA). In this context, the production of Hydrotreated Vegetable Oil (HVO), a renewable diesel, has been boosted. Major adaptations of large oil refineries are being made to convert them into HVO plants using soybean oil and new plants are being planned for the coming years.

According to the US EIA, HVO production is expected to grow strongly in the coming years, rapidly outpacing traditional biodiesel production. In the latter case, a scenario of declining production is envisaged, although there is also another projection where production could remain stable to rising. In other words, it seems that the outlook is not very clear for biodiesel, while significant growth is projected for HVO in the very short term, which is transforming the industry.

Looking ahead to 2023, between January and August, 9.33 million tonnes of oils were used for biodiesel/HVO production in the US, an increase of 2.3 million tonnes or 32% over the same period last year. According to Oil World, the US will have 13 million tonnes of biodiesel/HVO production in 2023, up 3 million tonnes from 2022. Compared to 2019, this is an increase in production of almost 50%, this is a trend that will continue for the next few years.

However, when analyzing the inputs used for biodiesel production – including HVO – between January and August 2023, soybean oil is the main product used with a share of 41% so far in 2023 and stable compared to 44% in 2022 for the same period. In relative terms, the product that grew the most as an input for biodiesel production is rapeseed oil, from 0.38 in 2022 to 1 million tonnes in 2023. Its relative share as an input to the biofuel industry doubled from 5% in 2022 to 11% in 2023 for the months under analysis. At the same time, the use of used oil for biodiesel/HVO production continues to grow, being the second most used input with 2.16 million tonnes between January and August, a year-on-year increase of 30%. In general, the use of all oils is growing, but the key fact is that the increase in domestic soybean oil production is not enough to keep pace with the growth in biodiesel/HVO production in the United States.

In the 2022/23 imports of palm and rapeseed oil grew exponentially, with expectations of continued growth in purchases in the new 2023/24 commercial year. Among the main oils, rapeseed oil is the one that accounts for the largest volume of imports, with 2.84 million tonnes in 2022/23 and a projection of 3 million tonnes for the 2023/24, which began in October. If this total is met, the increase in US rapeseed oil imports would reach 50% compared to the 2020/21. In the case of palm oil, imports are projected at 1.9 million tonnes in the 2023/24, a 20% increase over the 2020/21, prior to the modest jump in imports.

Finally, from the perspective of the Argentinean market, the sharp fall in US soybean oil exports consolidates Argentina’s trade possibilities at the global level. At the same time, the fact that the US is increasing imports of other oils to supply its biofuels industry is also a positive factor for our export market. The reason is that this partially mitigates the need to increase more quickly the crush of US soybean – which has a low oil content and a high percentage of meal – which would generate a large supply of meal with the possibility of pressuring the external market and competition with the main product currently exported by Argentina.


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