Editorial: Conflicting Passions Burn Brightly over Biofuels Production Mandate

BioRefineries/Renewable Fuel Production, Business News/Analysis, Canada, Environmental Protection Agency, Federal Agency/Executive Branch, Federal Regulation, Feedstocks, Field/Orchard/Plantation Crops/Residues, Marketing/Market Forces and Sales, Opinions, Policy, Russia

December 30, 2021

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by Josh Sosland (World Grain/Milling & Baking News) … Lost in the back and forth over the RVOs are the global forces driving strong prices for US edible oils. Viewed alone, the supply/demand balance for US soybean oil would not appear to justify record or near record high prices. The carryover of soybean oil on Oct. 1, 2022, is forecast at 1.91 billion pounds, down from 2.18 billion in 2021 but above carryovers of 1.85 billion in 2020 and 1.78 billion in 2019. Soybean oil supplies in 2021-22 were forecast at a record high 28.3 billion pounds.

The principal driver in edible oil markets has been tightening global palm oil supplies, the largest edible oil globally. Production in recent years has fallen short of expectations, in part because of pandemic-related labor shortages on plantations. Meanwhile palm oil global consumption has been rising rapidly — up over the past six years.

Other factors have kept global edible oil markets on edge, including a small canola crop in Canada and disastrous sunflower seed crop in Russia. As a result, export demand for US soybeans and soybean oil have been unusually strong.

If global supplies of edible oils begin catching up with demand over the next year or so, bakers and consumers will gain much needed relief. Until then, volatility and abnormally high prices are likely to be market features purchasing executives are forced to address. READ MORE

Baking group seeks EPA change on biofuel mandate (Food Business News)

Food costs ease from near record, offering inflation respite (Bloomberg)

Excerpt from Food Business News: The Environmental Protection Agency should exercise its authority to decrease proposed advanced biofuel quotas, according to the American Bakers Association. In testimony Jan. 4, the ABA said such cuts are needed to help assure the public will be able to find and afford basic food staples such as baked foods in the months ahead.

Representatives of the ABA testified at a public hearing about the Renewable Fuel Standard.

“The EPA’s proposed increase in advanced biofuel required volume obligations could jeopardize the ability for our members to meet the constant demand of providing millions of baked goods to grocery stores, restaurants, and federal feeding programs,” said Lee Sanders, senior vice president for public affairs and government relations at the ABA. “That’s because soybean oil, a critical ingredient for bakers, has been increasingly diverted away from the food supply chain and toward the production of advanced biofuels, as federally directed by the EPA’s RFS program.” READ MORE

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