US Import Tariffs On Vegetable Oils To Shift Demand And Supply
14/11/2024 (Business Today) - US President Trump’s plans to roll out blanket import tariffs could reduce or stop imported vegetable oil and fat supplies, pushing the US crush industry to build new plants and expand capacity, as American farmers are worried that US’ protectionist stance will limit their access to top soy buyers from China, reported Reuters on Wednesday.
Hefty global competition could dent incomes for farmers who just harvested the second-largest US soybean crop ever at a time when crop prices hover near four-year lows.
Analysts noted that if Trump’s import tariffs prompt retaliation by global US soybean buyers, big soy processors such as Bunge Global and Archer-Daniels-Midland Co could benefit from a larger and likely cheaper supply of beans for them to crush in the US.
Such expansion plans faltered over the past year, as the US market was flooded with cheaper global supplies of diesel feedstocks like used cooking oil (UCO) from China, tallow from Brazil and canola oil from Canada.
These supplies. or rather over supplies, are the likely targets for Trump’s tariffs while global supplies of other vegetable oils and fats are tightening and prices are climbing.
USDA data projects that global rapeseed oil supplies will shrink by 13% over the coming year with sunflower seed oil stocks down 24%. Indonesian palm oil shipments have dropped owing to the country’s expanded biodiesel production next year.
The vegetable oils and fats are closely watched by local Malaysian analysts as they compete with Crude Palm Oil (CPO) in fulfilling regional and global demand. On Nov 13, 2024, the prevailing CPO price published by the Malaysian Palm Oil Board (MPOB) stood at RM5,100/tonne, just RM80.50 lower than the highest price on record in 2024 which is RM5180.50/tonne.