Soybean oil futures soared as much as 3.8%, boosted by expectations the Trump administration will deliver long-awaited U.S. biofuel-blending quotas by March.
The Environmental Protection Agency last year signaled it will raise targets for so-called biomass-based diesel that can be made from soyoil and other crop-based feedstocks, but traders have been waiting for final details. That plan will likely be finalized in the next few months, according to people familiar with the matter. Still, there’s a chance that timing could change, said the people, who asked not to be name discussing private information.
The timeline on the quotas was reported earlier by Reuters.
Production of biomass-based diesel is set to rise sharply if the increased targets are adopted, according to Bloomberg Intelligence analyst Brett Gibbs. “This has long been our preferred route to support biofuels and domestic crops,” he said.
More crops used to make biofuel can offset losses in export markets. Shipments of US soybeans are below last year after the world’s top importer China halted purchases up until a meeting between President Xi Jinping and Donald Trump in October.
Soyoil’s intraday gains were the biggest since Aug. 22.
Futures for whole soybeans climbed as much as 1.5%. The U.S. Department of Agriculture announced five export sales in its daily reporting system, including 204,000 tons of U.S beans to China. The Asian nation has now purchased more than 8 million tons out of a target for 12 million tons, while there are an additional 3 million tons of soybeans sold to unknown destinations, USDA data shows.
Meanwhile, Canadian Prime Minister Mark Carney is set to meet Xi in China on Friday with a goal of winning some relief from Beijing’s duties on Canadian agricultural products, particularly canola. Canola futures were up as much as 2.2%.
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