Trump Threatens China Cooking Oil as Payback for Soy Boycott

Chinese exports of used cooking oil to the US were already in retreat well before President Donald Trump chose them as the latest flashpoint in his trade war with Beijing.

Trump has landed on purchases of cooking oil as a possible weapon to counter China’s refusal to buy US soybeans. Used cooking oil, or UCO, is a feedstock commonly employed to make biofuels. However, soybeans remain a much more valuable commodity, and it’s unlikely that ending the China-US trade in UCO would have a dramatic impact on either buyers or sellers. Bloomberg's Mike McGlone reports.

Having hit a record 1.27 million tons — worth $1.2 billion — in 2024, Chinese sales of processed edible oils to the US, mainly UCO, have plunged this year after Beijing scrapped tax relief on exports. Over the first seven months, sales were 387,000 tons versus 684,000 tons in the same period last year, according to the US Department of Agriculture.

By comparison, Chinese soybean purchases from the US last year totaled about $12.6 billion. Still, America was China’s top destination for UCO in 2024, accounting for about 43% of its exports, the USDA said.

Chinese shipments to the US have fallen, with some redirected to the European Union and others to domestic producers of sustainable aviation fuel, said Dan Mackay, an analyst in Singapore at price reporting agency Quantum Commodity Intelligence.

Waning demand from the US has already been priced in by the market, he said, and export offers for Chinese UCO cargoes are unchanged since Trump’s post threatening to end the trade.

China’s exports of UCO to the US began to surge in 2023 as American biofuel producers snapped up cheap supplies to capitalize on the Biden administration’s green incentives. A similar increase in the EU prompted a probe by the bloc into Chinese shipments after local competitors complained about artificially low prices.

That backlash spread to the US, where the biggest soybean processors accused China of undercutting American crops used for biofuels. Beijing’s removal of tax breaks on overseas sales of UCO on Dec. 1 further shrank its appeal as an export.

It means the direct impact of a ban on both China and the US will be limited. Chinese traders could see “short-term pressure as they redirect volumes to Europe or deal with weaker prices and higher inventories,” said Kang Wei Cheang, an agricultural broker at StoneX Group Inc. in Singapore.

In the US, the supply of low-carbon feedstock could tighten, he said. Soybean oil futures on the Chicago Board of Trade did respond positively to Trump’s threat, adding as much as 1.7% before paring gains.

Overseas markets for other vegetable oils, including palm oil from Southeast Asia, are likely to come under some pressure from the president’s protectionist tilt. Futures in Kuala Lumpur dropped as much as 0.6% before recovering most of those losses.

Shares for Bunge Global SA, the world’s biggest oilseed processor, notched their biggest intraday gains since 2023 with crushers in the US potentially benefiting by any disruption in imports.

“It is bearish on palm oil but bullish for local US soybean oil,” said Rajesh Modi, a trader at Sprint Exim Pte in Singapore.

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