Trump's cooking oil embargo would be bullish for these 3 stocks

Tensions between the US and China intensified after President Trump threatened a cooking oil embargo in response to China's refusal to buy US soybeans. The threat is boosting oil-seed processor stocks like Bunge (BG) and ADM (ADM).

Heather Jones Research founder and senior analyst, Heather Jones, joins Market Catalysts host Julie Hyman to explain why Bunge, ADM, and Darling Ingredients (DAR) would be the "primary beneficiaries" of such an embargo.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

And there's what it means for the farmers and there's also what it means potentially for oilseed processors. I couldn't help but notice that Bunge, um, which is one of the biggest oilseed processors, uh, in the US is up today. It also reported its earnings, right? And it, uh, talked about the acquisition of a company called Viterra and the effect that's going to have long term. So, Heather, how are you thinking about Bunge and other oilseed processors and how that relates to this whole picture?

00:39 Heather

So, one of the reasons Bunge is up is um they did, they provided updated guidance and I think there were fears that the Viterra delusion was going to be far more than it ultimately ended up being. Um but ADM, Bunge, uh they would be helped dramatically by uh a permanent or semi-permanent reduction in Chinese UCO imports because basically every gallon or pound we reduce imports of Chinese UCO by, soybean oil is the most likely uh replacement. So it's very bullish for the ADM and Bunges of the world. It's also bullish for Darling ingredients which uh they're a weight, they're the biggest UCO processor in uh in the US. And uh they're the ones that go around and take the used oil from like the Wendys and the McDonald's of the world, and so they're the biggest seller here. So, ADM, Bunge and Darling would be the primary beneficiaries of this change.

01:45 Speaker A

So, I'm I'm interested how you think this is all going to play out, Heather? Because it doesn't sound like you think necessarily this will be a sort of permanent ban on these types of imports.

02:11 Heather

I mean, Trump has articulated a US first policy across the board and and and is playing that out on the US um biofuel side as well. So I do think um differentiated tariff systems will stay in place to um prioritize US produced feed stocks, but my gut is that a permanent wholesale ban on Chinese UCO is unlikely to stand and once we get finalized biofuel policy that will be very helpful to the US farmer, um my view is that that ban will be relaxed somewhat.

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