Brazil said the US has cleared the way for its shipments of used cooking oil in a move that may further erode profits for American soybean producers and crushers as they face increased competition from imported biofuel-making ingredients.

The US has recognized international certification for Brazil’s compliance with some sanitary and technical standards, according to a joint statement from the South American country’s ministries of foreign affairs and agriculture. To meet US requirements, Brazil’s government will issue certification of traceability, identity and origin of used cooking oil, or UCO.

The move comes at a time when the US is being flooded with low-carbon feedstocks including waste oil and tallow for production of green diesel. That has weighed on prices for soybean oil, which is also used to make renewable fuel, eroding profits for companies such as Bunge Global SA and Archer-Daniels-Midland Co. and jeopardizing expansion plans.

US imports of used cooking oil more than tripled in 2023 from a year earlier, with more than half coming from China, according to the US International Trade Commission. The increase from China has stirred speculation that some imports may not be authentic and instead are mixed with fresh vegetable oils, potentially undermining US biofuel laws. 

American industry groups and biofuel executives are urging the US to tighten scrutiny on the imports, including better methods to ensure purity of UCO. A US soybean trade group is calling for increased tariffs on Chinese UCO. 

Brazil was already benefiting from the US biofuels boom as US fuelmakers turn to overseas for raw materials. American purchases of Brazilian cattle tallow, a form of waste fat, climbed 377% in the first four months of 2024 from a year earlier.