Some interesting takeaways from this morning’s sessions with Tomas Araujo and Arlan Suderman are how deeply intertwined agricultural markets, energy policy, and international trade have become.
A few themes stood out: The U.S. biofuel program continues to act as a major demand engine for agricultural commodities. Current proposals for D4 Renewable Volume Obligations (RVOs) suggest a meaningful increase from prior years, with any finalized number above 5 billion gallons representing one of the largest expansions we’ve seen. But perhaps more important than the number itself, is policy clarity. Businesses and markets tend to price certainty faster than volume. Higher biofuel mandates not only affect domestic producers, but also ripple across global vegetable oil markets.
Palm oil sits right at the center of this dynamic. Palm oil remains one of the world’s most cost-efficient feedstocks. When biofuel demand rises, substitution effects become unavoidable. Stronger demand for soybean oil, canola oil, and other biofuel inputs inevitably tightens global vegetable oil balances, indirectly influencing palm oil flows, pricing, and trade patterns. At the same time, global supply dynamics are shifting. Brazil continues expanding its role as a dominant agricultural producer. Production capacity, land availability, and rising corn-based ethanol consumption reinforce Brazil’s competitive position across corn and soy complexes. Brazilian food, seed, and industrial corn demand show a clear structural uptrend.
Meanwhile, U.S. soybean crush margins and processing volumes highlight another structural story: domestic demand for soybean oil (driven heavily by renewable diesel) is reshaping how soybeans are valued. Crushing is no longer just about meal production as soybean oil has become central. And then there’s the looming question on China. Despite recurring tariff friction, China remains the critical swing buyer. Even modest shifts in Chinese purchasing patterns can materially alter global balances. Pricing comparisons consistently show how tariffs distort competitiveness rather than eliminate trade flows. As the April Trump-Xi meeting approaches, given China’s recent military purges and how they’ve reflected on domestic politics, China needs the United States more than ever to secure access to high-end chips and easing economic pressure created by the Trump tariffs.
What emerges is a broader reality: Commodity markets are no longer driven purely by weather or yield assumptions. They are increasingly shaped by energy policy, trade policy, feedstock substitution and regional demand shifts. Palm oil, U.S. biofuel mandates, Brazilian production growth, and Chinese import behavior are not happening in a vacuum – they are all components of the same global equation. For companies operating in international trade, these linkages matter. Tariff exposure, sourcing strategies, classification accuracy, and country-of-origin planning are no longer administrative exercises; they are risk management tools essential to business longevity. Understanding policy-driven demand shocks is becoming just as important as understanding supply fundamentals.
By Maria Pechurina 白玛莎, Director of International Trade Peacock Tariff Consulting