The Wednesday HOT TAKE

May 8

The Summit 24 lineup is getting better by the day!

I am excited to announce I will be joined on stage for a one-on-one with Todd Becker, President & CEO of Green Plains, Inc.

Register in May to save $100 per ticket. Save even more by reserving a table of four.

Visit NoBullSummit.com for more information & to register!

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What’s HOT & What’s NOT

SBO = was HOT & now it’s NOT

Last Wednesday I mentioned February’s feedstock data for biomass-based diesel production was worrisome for soybean oil as it was the first year-on-year decline in demand since December 2022.

Looking closer - bean oil’s use in renewable diesel production hit a 10-month low, while its biodiesel demand was the lowest monthly total in two years.

Two things at work here:

1. Renewable diesel capacity continues to cannibalize traditional biodiesel capacity due to its higher subsidies, no limits on blend, etc.

2. Soybean oil is the least-favored feedstock in renewable diesel production because it has the highest carbon intensity of the feedstock options. Soybean oil only sees big demand because (historically) it has been relatively inexpensive and widely available - otherwise known as WINNING BY DEFAULT

And yes, biodiesel production has always used MORE soybean oil than renewable diesel production. In fact, there has never been a month renewable diesel’s soybean oil demand has surpassed that of biodiesel.

But why are we constantly referring to renewable diesel as being the thing that spurred a new era in soybean (oil) demand?

It is because renewable diesel’s demand is additive.

EIA has only been reporting bean oil’s use as a feedstock in renewable diesel production for two years now, but to illustrate the point above - let’s look at 10 years of history for biomass-based diesel production.

Renewable diesel has been around for years, but production did not ramp up until California’s Low Carbon Fuel standard spurred an unprecedented boom in demand.

Biodiesel production (and its demand for bean oil) has been relatively static-to-declining the past few years, while renewable diesel production (and its demand for bean oil + other feedstocks) has increased 3-fold the past 2 years, raising soybean oil’s biofuel demand by 50% in that time.

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HOT Commodities

Speaking of ‘new’ demand…

The uptick in biomass-based diesel production has opened up the gates for a flood of fat & oil imports to meet riding feedstock demand.

The U.S. imported a record amount of fats and oils in March, fueling a boom in renewable diesel production (literally).

Imports of heavy-hitter feedstocks used cooking oil, tallow, and canola oil have exploded in recent months, providing stiff competition for soybean oil.

For the first 3 months of 2024, UCO+canola+tallow imports are up 50% vs last year & up 170% from 2022.

2023 was an outlier, but 2024 is on track to dwarf it in a big way:

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HOT Seat

While tallow and canola oil imports are on the rise, used cooking oil sits in the hot seat for two reasons:

1. We imported 3.1 billion pounds of it in 2023 - a 255% increase from the year prior and up nearly 1000% from 2021