Large agribusiness industries, such as Cargill e Bungeare reducing their soybean purchases due to uncertainty over US biofuels policy. The grain is one of the most used in the production of biodiesel.
The lack of predictability for a new clean fuel tax credit is causing biofuel producers to delay some soybean oil purchases until early next year. This is reducing demand for soybeans, leading large grain traders to also reduce their purchases, according to sources interviewed by the report.
“No one is producing, no one is buying, no one is mixing,” said David Fialkov, executive vice president of government affairs at NATSO, a trade group for trucking stations and transportation power centers.
Cargill said uncertainty surrounding biofuels policy for 2025 has not impacted its pace of soybean purchases, and that it is actively purchasing soybeans at all of its processing plants. Bunge declined to comment.
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Another major uncertainty surrounding the tax credit is the outcome of the presidential elections. It is unclear whether the Biden administration will determine a fiscal policy that will be carried out by the new president. Another question is whether the 45Z credit will be extended beyond its current maturity at the end of 2027.
The delay in guidance is leaving renewables producers with little visibility into the financial viability of their fuel production, threatening to cripple the fast-growing sector. Just two years ago, the U.S. was racing to build more factories to process crops like soybeans, which are crushed to produce oil for food and fuel, as well as meal used for animal feed.
With so much uncertainty about when and how the new subsidy will be implemented, crushers have diverted a greater share of soybean supplies to food export markets, said Kent Woods, CEO of CrushTraders.
“There is less demand for renewable diesel and food demand is currently in the lead,” Woods said. This dynamic is also creating a major shift where the US is exporting soybean oil again.
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