Bunge, Cargill slow soybean buying amid US biofuel policy uncertainty

USA – Agriculture giants, including Cargill Inc. and Bunge Global SA, are slowing their buying of soybeans due to uncertainty over the US biofuels policy

Industry insiders report that delays in the Treasury Department’s guidance on a new clean-fuel production tax credit, set to start in January, have left renewable fuel producers hesitant to procure soyoil, a key feedstock in renewable diesel and jet fuel production for early 2025.

As a result, soybean demand is diminishing, impacting the purchasing strategies of these major agribusinesses.

The clean-fuel production credit, known as 45Z, was introduced to encourage low-carbon fuel production.

However, key issues remain unresolved, including whether foreign-sourced biofuel ingredients, such as waste animal fats and used cooking oil, will qualify for the credit.

This ambiguity poses a major challenge for biofuel producers who rely heavily on soyoil, as they wait to see if the new incentives will be financially viable.

NATSO, a trade association for truck stops and travel plazas, noted that as of mid-October, most fuel retailers had only secured about 10% of their biodiesel needs for the first quarter of 2025, a stark contrast to the typical 80% by this time of year​

David Fialkov, NATSO’s executive vice president of government affairs, summarized the situation, stating, “Nobody’s producing, nobody’s buying, nobody’s blending.”

This slowdown comes at a critical time for the biofuels industry, which saw rapid growth in recent years as part of efforts to decarbonize transportation.

The U.S. had previously expanded biofuel processing facilities, especially for soybean crushing, to support both food and fuel production.

However, as the timeline for new policies remains uncertain, crushers like CrushTraders are shifting more soybeans to food and export markets, according to Kent Woods, chief executive officer of CrushTraders.

Adding to the uncertainty, the upcoming U.S. presidential and congressional elections could further delay guidance on the 45Z credit, with potential changes in leadership affecting future policy directions.

Biofuel producers and agricultural traders now face mounting challenges in forecasting demand, especially if guidance is postponed until a new administration is in place​

The broader renewable energy landscape is also affected by shifts in the transportation sector, with increasing adoption of electric vehicles (EVs) set to reduce demand for road-based biofuels like ethanol.

However, renewable diesel, derived largely from soyoil, remains promising due to its role in heavy-duty transportation, which is less suitable for electrification.

This demand shift is expected to support the long-term prospects for renewable diesel, even as the biofuels industry grapples with policy delays and shifting market dynamics​

For now, the agriculture and biofuels sectors await further updates from the Treasury Department, with the future of biofuel subsidies, production strategies, and soybean demand hanging in the balance.

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