BEIJING: China’s soybean oil futures fell to their lowest in three months on Wednesday after the US announced plans to allow year-round sales of gasoline with a higher ethanol blend, intensifying demand concerns around soybean oil.
The most active contract for May delivery on the Dalian Commodity Exchange fell 3.7% to 7,594 yuan ($1,042.43) per metric ton, its lowest since September.
A US government funding bill released on Tuesday included a plan to allow year-round sales of gasoline with a higher ethanol blend, known as E15, in a major win for the corn and ethanol lobbies.
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Currently, sales of the blend are effectively blocked from June to September.
“The market expects demand for soybean oil to decrease in the future,” said Xuan Dongshuang, analyst at research firm Sublime China Information.
Growing concerns about the cancellation of a US tax credit policy for biodiesel blending are also driving prices lower, analysts said.
Biden administration officials will not finalise highly anticipated guidelines on new clean fuel production tax credits aimed at the airline and biofuel industries before they leave office in January, Reuters reported earlier this month.
“Market expectations are that the tax credit for biodiesel blending will not be extended after it expires at the end of this year,” Xuan said.
A discontinuation of the tax credit will be unfavourable to biodiesel production and lower demand for soybean oil as a major feedstock.
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