US import duties on vegetable oils will change supply and demand

U.S. President Trump’s plans to impose across-the-board import duties could reduce or end the supply of imported vegetable oils and fats to the States, prompting the U.S. oil-extraction industry to build new plants and expand capacity. U.S. farmers are concerned that the U.S. protectionist stance will limit their access to China’s biggest soybean buyers, Reuters reported.

Stiff global competition could cut into the incomes of farmers who just harvested the second-largest soybean crop in U.S. history, while soybean prices are hovering near four-year lows.

Analysts said that if Trump’s duties trigger retaliation from global buyers, large soybean processors such as Bunge Global and Archer-Daniels-Midland Co could benefit from larger and likely cheaper supplies of beans for processing domestically. Capacity expansion plans stalled last year as the U.S. market was overwhelmed by cheap global diesel feedstocks such as used cooking oil (UCO) from China, lard from Brazil and rapeseed oil from Canada.

The U.S. Department of Agriculture (USDA) forecasts global rapeseed oil supplies will decline 13% over the next year, while sunflower oil stocks will decline 24%. Indonesian palm oil supplies to the country are declining due to plans to expand biodiesel production in the country.

According to the agency, U.S. soybean exports to China fell to about 26.4 million tons last year (compared to 36.1 million tons in 2016 and 31.7 million tons in 2017, on the eve of the trade war).

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Tags: USA, edible oils