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The US Department of Agriculture (USDA) said on Friday that US biofuel producers will consume more than half of the country's total soybean oil output next year, amid a series of federal policy moves that have reshaped the sector, including higher mandatory blending rates and curbs on imported biofuels and foreign feedstocks.
In its monthly supply and demand report, the USDA sharply raised its forecast for soybean oil use in biofuel production during the 2025/2026 marketing year, which begins on 1 October, to a record 15.5 billion pounds, up 11.5% from last month's forecast and 26.5% higher than the current season.
By contrast, the USDA forecast that US soybean oil exports would fall to just 700 million pounds in the 2025/2026 season, down from 2.6 billion pounds in the current season, as domestic consumption rises.
The US Environmental Protection Agency (EPA) proposed last month raising the volume of biofuel that refiners must blend into national fuel supplies for 2026 and 2027, driven by a substantial increase in biomass-based diesel requirements, alongside measures to curb biofuel imports.
The fast-growing US biofuel industry has welcomed these steps after months of policy uncertainty that had hampered production of fuel made from vegetable oils such as soybean oil, canola oil and used cooking oil.
Under the Renewable Fuel Standard, refiners must blend large volumes of biofuel into the US fuel supply, or purchase credits known as RINs from parties that do so.
The USDA said:
"Not only did the EPA sharply raise blending rates, it also proposed cutting the number of RINs issued for biofuel that is imported or made from foreign feedstocks starting in 2026, boosting demand for domestically produced feedstocks such as soybean oil."
The USDA added that additional incentives, such as state biofuel mandates and the federal Clean Fuel Production Tax Credit (45Z) included in the budget bill recently signed by US President Donald Trump, had further boosted expectations for soybean oil use in biofuel production.
Separately, soybean oil futures on the Chicago Mercantile Exchange rose on Friday, trading near their highest level in seven and a half months, a peak reached on 23 June.
Source: Reuters