This move was nearly one standard deviation higher with oil share @41% also closing ahead of the long weekend (labor day). Beans moved only 2.5% higher. Always difficult to dessicate a rumor. No doubts that news of large UCO imports from China have been spinned by Main Stream Media most recently with little effect on trade who didn't find any surprising news there. That changed today. The entire biodiesel/Renewable diesel trade knows that investigations are going on already for some time by both EU and US. No one is of course speaking about the +377% increase in Tallow imports from Brazil into the US. We did note that the paranagua FOB soyoil market bids dropped dramatically with offers chasing bids down to +80 from offers the day before at +250. The big issue with UCO that no one seems to fully comprehend except the RD trade that nothing compares with the carbon intensity of Used Cooking Oil. Although it looks like a simple substitution issue, the real conundrum is that the IRA 45z rule was built on the same architecture of measuring carbon intensity as California and Germany. This has been thoroughly studied and Europe already limited crop based feedstocks. California is thinking about doing the same starting in 2028. Crop based oils have a long way in meeting the CI scores required to maximize 45z. Therefore I reattach the table from USDA that shows the differentials. Everyone should understand that even if US limits or constrains UCO imports from China, this will result in higher overall CI and less 45z benefits hence less demand from the RD industry as you still do not have the BTC next year at the moment. The situation in EU is a little different as there are other ways to meet the high GHG savings requirements and none of these solutions involve more crop vegoil.
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