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The United States' biofuel industry achieved a new milestone in May, consuming an unprecedented 1.43 billion pounds of soybean oil. This figure represents a significant 17% increase from the 1.22 billion pounds utilized in April, according to data released by the US Energy Information Administration (EIA) on Friday, July 31.
Breaking down the consumption, producers of renewable diesel in the US accounted for 687 million pounds of soybean oil, marking a substantial 28% rise from 537 million pounds in April. Meanwhile, biodiesel manufacturers used 747 million pounds, an increase of approximately 9% over the 686 million pounds consumed the previous month.
This surge in soybean oil consumption by US biofuel producers over recent months is primarily attributed to the finalization of US biofuel blending mandates and updates to the 45Z Clean Fuel Production Credit earlier this year. In May, soybean oil's share in the total US low carbon-intensity (CI) feedstock pool expanded to over 39%, up from 36% in April.
However, the long-term share of soybean oil in the overall US feedstock slate is projected to be 30-35% for 2024 and 2025. This marks a decline from the record highs of 50-60% observed between 2020 and 2022, a shift attributed to a combination of softening domestic demand and the availability of cheaper imported low CI feedstocks.
Looking beyond soybean oil, the EIA data also provided insights into the consumption of other vegetable oils. The US biofuel sector consumed 293 million pounds of canola oil in May, a decrease of nearly 20% from 365 million pounds in April and 27% from 403 million pounds in March. Consequently, canola oil's market share in the total US feedstock mix dropped to 8% for the month, down from about 10% in April.
In contrast, used cooking oil (UCO) saw a notable increase, with biofuel producers consuming 605 million pounds in May. This 28% month-on-month rise represents the highest recorded level for UCO since October 2024, accounting for more than 16% of the total US feedstock slate.
Tallow also experienced robust demand, with US producers utilizing 796 million pounds for biofuel production in May. This was an increase of over 20% from 660 million pounds in April, raising tallow's share to nearly 22% of the total US feedstock pool, up from around 20% previously.
Conversely, the use of distiller's corn oil (DCO) in domestic biofuel production slightly decreased in May to 457 million pounds, a 4% dip from its record high of 477 million pounds in April. DCO constituted approximately 12% of the total feedstocks used in May, down from nearly 15% in April.
The US Department of Agriculture (USDA), in its July 'World Agricultural Supply and Demand Estimates' (WASDE) report, reiterated its forecast for strong domestic soybean oil demand, particularly from the US biofuel sector, extending into 2027. Projections indicate that US producers are expected to consume 14.55 billion pounds of soybean oil for biofuels in the 2025/26 marketing year. This figure is then anticipated to surge by 22% to an estimated 17.8 billion pounds in 2026/27.
This sustained high consumption of low carbon-intensity feedstocks is directly linked to elevated Renewable Volume Obligations (RVOs) for 2026 and 2027. Under the US Renewable Fuel Standard (RFS), oil refiners are mandated to blend billions of gallons of biofuel into the US fuel supply annually or acquire Renewable Identification Numbers (RINs) from other blenders or producers. Expressed in RINs, the biomass-based RVO requirement stands at 5.4 billion gallons for 2026 and 5.7 billion gallons for 2027, both significantly higher than the 2025 mandate of 3.35 billion gallons.
These developments are closely monitored by market participants involved in the biofuels and feedstocks sector. The complex marketplace involves tracking pricing for various components, including biodiesel, glycerin, Renewable Identification Numbers (RINs), California’s Low-Carbon Fuel Standard (LCFS) credits, and related certificate markets in Europe.
Source: Fastmarkets