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Benchmark soybean oil futures trading on the Chicago Mercantile Exchange ended slightly lower on Wednesday January 29.
March soybean oil futures closed the midweek session just below $0.4500 per lb, at $0.4497 per lb, down by $0.0016 per lb from a settlement of $0.4513 per lb the day before.
Heightened confusion surrounding US biofuels policy and tax credits kept market participants on edge again. On January 29, the Office of Management and Budget (OMB) rescinded its January 27 memo regarding a temporary freeze of grants and loans under various federal programs.
Widespread executive directives from US President Donald Trump were set to go into effect on January 28, one of which was to temporarily pause federal distribution of funds appropriated through the 2022 Inflation Reduction Act (IRA).
The January 29 OMB memo came a day after the US District Court of the District of Columbia issued a temporary stay, blocking the pause in the federal fund distribution.
“If you have questions about implementing the President’s executive orders, please contact your agency general counsel,” the January 29 memo said.
On Day 1 of his second term, Trump signed a host of executive orders, including the Unleashing American Energy Executive Order. But confusion quickly erupted over the language and specifics of the directives, and various legal challenges were mounted.
Initially, the energy-related order appeared to apply to all IRA funds, with Section 7, Terminating the Green New Deal, instructing all federal agencies to review processes, policies, and programs for issuing grants, loans, contracts and any other financial disbursements, including those that support electric vehicle (EV) charging stations.
But several market sources said the executive order would not necessarily impact the 45Z Clean Fuel Production Tax Credit (CFPC) – which provides an incentive based on the emissions rate of the feedstock used in the production of biofuel.
The funding pause was not expected to include various IRA tax credits, including 45Z and consumer credits for EV purchases, because tax credits are not appropriated funds, a January 23 research note from international law firm Akin said.
The CFPC went into effect on January 1, following the expiration of the $1-per-gallon Blenders’ Tax Credit (BTC) on December 31, 2024. The BTC was applicable to all blended renewable fuels, regardless of the carbon intensity score of its feedstock.
The federal freeze has already started to impact the clean fuels sector. On January 28, renewable fuels producer Montana Renewables said the first tranche of a $782 million guaranteed loan facility would be subject to “a tactical delay to confirm alignment with White House priorities,” according to the US Department of Energy.
The funding was slated for release on January 28. The $1.44 billion loan closed on January 10 and was earmarked to fund the construction and expansion of Montana Renewables’ renewable fuel facility in Great Falls, Montana. Montana Renewables is a subsidiary of Calumet Inc.