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A two-day summit between US President Donald Trump and Chinese President Xi Jinping on May 14-15 signaled a willingness from both sides to re-engage on trade, including agricultural commodities.
However, initial market reaction has been muted, with early readouts failing to deliver any firm commitments on increased Chinese purchases of US products or changes to existing tariff structures. That uncertainty weighed on soybean, soyoil and soymeal futures, as speculative long positions built on expectations of stronger export demand were unwound.
While US officials pointed to potential agreements covering agricultural products, including soybeans, details remained limited and no clear commitments yet on volumes or timing were confirmed. Market participants also noted that the discussions produced little clarity around the status of existing tariffs on US agricultural exports.
As a result, the outlook for a meaningful recovery in US agricultural trade flows remains unclear, limiting near-term support for soybean oil and leaving vegetable oil markets searching for clearer demand signals.
Any shift in soybean trade flows has broader implications beyond raw commodity markets.
Soybean oil remains the dominant feedstock in US renewable diesel and biodiesel production, meaning changes in export demand can influence domestic availability and pricing relative to alternative feedstocks.
A sustained rebound in Chinese buying would alter global vegetable oil balances and could shift the economics between soybean oil and lower-carbon feedstocks such as used cooking oil (UCO) and tallow, which compete within the same fuel pool.
At the same time, developments in China earlier in the week point to growing competition on the waste oil side of the market.
On Monday May 11, the coastal city of Lianyungang, China, signed a strategic agreement with state-owned China National Aviation Fuel Group to build a closed-loop system for collecting and converting UCO into sustainable aviation fuel (SAF), aimed at improving feedstock collection, traceability and processing efficiency.
The development supports an established SAF production hub in the region, where facilities operate at up to 500,000 tonnes per year of capacity, implying feedstock demand exceeding 600,000 tonnes of UCO annually.
The move also aligns with China’s broader push into SAF markets since 2025, including early export activity from producers such as Zhejiang Jiaao Enprotech, and reflects a wider trend across Asia to retain waste-based feedstocks for domestic fuel production.
While stronger collection systems could improve local availability, they also point to tightening global supply, reinforcing competition for feedstocks that are inherently constrained by their link to waste streams rather than scalable agricultural output.
For US markets, that dynamic is particularly relevant given the sector’s growing reliance on imported UCO, even as policy signals around foreign feedstocks remain mixed.
Imports have risen sharply in recent years, climbing from roughly 1 million metric tonnes in 2021 to about 2.17 million tonnes in 2025, with China alone accounting for a quarter of that volume.
More recent trade data suggests a slower start to 2026. US imports of UCO and related inedible oils totaled about 233,397 tonnes through March, compared with roughly 712,406 tonnes over the same period in 2025, reflecting materially lower inflows to begin the year.
Imports from China, in particular, have decreased sharply, with volumes totaling around 58,475 tonnes through March compared with 249,639 tonnes over the same period last year, highlighting a significant pullback in China-origin supply.
This decline has been driven in part by policy constraints. Under current draft guidance, UCO sourced outside North America faces more limited eligibility under 45Z pathways due to traceability and verification concerns, reducing its relative value for domestic renewable fuel production.
But elevated domestic prices have reopened arbitrage opportunities, renewing interest in imported material, with Fastmarkets’ assessment of used cooking oil, delivered US Gulf reaching a four-year high of 84.5 cents per lb at the midpoint on May 15, even as concerns around the integrity of some China-origin UCO influence buyer preferences and credit eligibility.
Overall, the developments this week highlight how both trade policy and energy transition policy are increasingly influencing the same set of interconnected markets.
While the US-China discussions may point to the early stages of a more stable trade backdrop, the lack of concrete progress on agricultural trade leaves vegetable oil markets facing continued uncertainty, even as China’s SAF push reinforces competition for waste-based feedstocks.
For US participants, the combined effect is a more complex feedstock landscape in which availability and pricing are shaped not only by domestic supply fundamentals, but also by evolving trade relationships and global biofuel demand.
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