U.S. Rapeseed Oil Demand Increases by More than 40% After EPA Approval for Biofuel Feedstock

North Dakota: From January 2023, Canola Oil (Rapeseed Oil) consumption has significantly increased in the U.S. market. The U.S. Energy Information Agency estimates that 108,769 tonnes of Rapeseed Oil were consumed, a 41.9 percent increase from the prior month. In the U.S. biofuel industry, canola oil made up 16.3% percent of all other vegetable oil consumption in January 2023, up from 5.7 percent a year earlier.

The demand for Rapeseed Oil has increased significantly as a result of the market for renewable diesel. Rapeseed/Canola Oil was acknowledged by the Environmental Protection Agency as an acceptable feedstock for the oil industry in December 2022. Before the advent of this new source of biofuel demand, the commodity had been making headway in the U.S. market for food for domestic consumption, filling the void left by the Soybean Oil that was being diverted to the renewable Diesel sector. The demand for Canola Oil as a non-biofuel has grown significantly this year, by a whopping 49 percent year over year.

Rapeseed/ Canola Oil is marketed at a higher price than soybean oil, but the cost of both products has recently been about the same. With a new source of demand for Canola Oil, that is about to change, and many people were startled to see that, overall, the cost of oils and fats used in the biofuel industry fell during the first quarter of 2023 in the domestic market of U.S. They had anticipated a rise in prices when the first batch of renewable diesel plants began to operate. During the previous four months, the renewable diesel fuel sector only operated at 57 percent of its potential, which was below average, and The average in 2022 was 73 percent; this is a decrease.

As per the ChemAnalyst database, the price of Rapeseed/ Canola Oil is likely to increase in the upcoming months due to a rise in demand from the energy and oil sectors. Moreover, demand is anticipated to pick up around May, ending at around 84 million lb per day in the period between August and September, which would be significantly higher than the five-year average.