Soyoil futures jumped 3% after Washington accused Argentina
and Indonesia of dumping in their $1.5bn biodiesel exports to the US – price
gains that according to Rabobank could herald larger rises to come.
Soyoil futures for July touched 33.47 cents a pound in
Chicago before easing back to 33.13 cents a pound in late morning deals, a gain
of 1.9% on the day.
The headway followed the release by the US International
Trade Commission that it had "made affirmative determinations" in its probe
into dumping by Argentina and Indonesia on biodiesel, adding that further
details of its findings would be revealed later.
"There is a reasonable indication that a US industry is materially injured by reason of imports of biodiesel from Argentina and Indonesia that are allegedly subsidised and sold in the United States at less than fair value," said the commission, which will now investigate potential tariffs.
The finding was welcomed by US biofuel producers including
Archer Daniels Midland, the ag trading giant, which said it was "pleased to see
that the ITC has taken the first step toward imposing countervailing and
antidumping duties on biodiesel imported from Argentina and Indonesia.
"The facts clearly show that Argentina and Indonesia are
engaging in unfair trade practices, and we are confident that duties will be
imposed when the final decision is made."
Switch to domestic
Rabobank in a report earlier on Friday said that Washington
was likely to impose "significant" import tariffs on biodiesel imports from
Argentina and Indonesia, if it assessed that the countries were backing their,
substantial, biodiesel exports to the US with "unfair" subsidies.
The EU in 2013, after a similar probe, imposed anti-dumping
duties of 19% on imports of Indonesian biodiesel, and 25% on Argentine
The bank added that the introduction of duties would - in
cutting imports from origins which exported 1.85m tonnes of biodiesel, worth
$1.47bn, to the US last year – open up a large hole in US supplies.
Indeed, given that the US mandates a minimum biodiesel
consumption, the tariffs could herald a surge in demand for domestic supplies
of the biofuel – and thus for the vegetable oils from which it is made.
In the US, and Argentina, soyoil is the primary feedstock
for biodiesel plants, although Indonesia makes its supplies from palm oil,
'Significant impact on prices'
Rabobank estimated the void as equivalent to 4.06bn pounds
of soyoil, the main vegetable oil produced in the US itself, adding 18% to
annual use, although thanks to imports, and used of rival feedstocks such as
corn oil, the gap may be "well below" that.
Nonetheless, the bank forecast that extra domestic
consumption would be sufficient to cut US soyoil inventories by 500m pounds, "which
would reduce 2017-18 US ending stocks to some of their lowest levels in 20
And - with tighter inventories implying higher values as buyers
are forced to pay up to secure supplies – "US soyoil prices could increase by
"The impact of import duties from both Indonesia and
Argentina could have a significant impact on US soyoil prices".
Bearish for palm oil,
US tariffs may affect too prices of palm oil, the vegetable
oil that Indonesia uses to make its biodiesel -- although the impact here would
be negative, the bank said.
The US accounts for 90-93% of Indonesian biodiesel exports.
"Any duty imposed on US biodiesel imports from Indonesia…
could prove slightly bearish to global palm oil prices."
Tariffs may also put pressure on values of soymeal, which is
also produced from soybean crushing, and would see its supplies boosted as a
result of the clamour for soyoil.
"The resulting increased US soybean crush could be bearish for
US soymeal prices, and would likely require higher US soymeal exports."
The forecasts follow comments earlier this week from Soren
Schroder, chief executive of Bunge, the global agribusiness giant which has soy
crushing operations in both the US and Argentina, that the imposition of the
tariffs would be a big thing.
It "will create an enormous demand for vegetable oil, both
of soybean oil and canola oil, which will be very positive to crushing margins
in both Canada and the US," Mr Schroder told investors.
"So that part would be a big boost to North American
crushing margins, both in softseeds and in soy crush."
While in Argentina the duties would mean that "biodiesel
margins… won't be there and the industry won't run", the curbs would overall be
a "sizeable net positive" for Bunge, he said.