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Prices rise on higher US EPA renewable fuel targets for 2026 and 2027; soybean meal prices fall 14%
Soybean oil prices have risen more than 30% since the start of the year, outperforming gold, silver and copper. The rally is largely attributed to targets proposed by the US Environmental Protection Agency (EPA) under the Renewable Fuel Standard (RFS) for 2026 and 2027.
Only cobalt has outperformed soybean oil, climbing 37%, driven mainly by the export ban imposed by the Democratic Republic of Congo since last February.
By contrast, soybean meal prices have fallen by nearly 14% since January 2025.
Research agency BMI, part of Fitch Solutions, said prices of soybean complex components moved in opposite directions over the past month, with soybean oil futures rising 11.8% month-on-month through the 30 June session, while soybean meal prices fell 8.1% over the same period.
The agency added: "The [EPA] proposals point to higher domestic biomass-based diesel (BBD) targets, and include changes to Renewable Identification Number (RIN) policy that would see imported fuel, or fuel made from imported feedstocks, counted at half value when calculating compliance with the mandate. As a result, the EPA expects soybean oil use in the biodiesel sector to rise by around 250 million gallons annually over the forecast period."
On 1 July, the US Senate passed the "One Big Beautiful Bill Act," which stipulates that support for clean fuel production will only apply to fuel derived from feedstocks produced or grown in the United States, Mexico or Canada.
Soybean meal futures (second-month contract on the CBOT) closed on 30 June at 275.8 US cents per bushel, down 21% year-on-year, while August soybean oil futures closed at 54.55 cents per pound.
According to the Solvent Extractors' Association of India, the price of degummed soybean oil (C&F Mumbai) stood at $1,180 per tonne last week, compared with $1,054 a year earlier. Meanwhile, export soybean meal prices stood at $390 per tonne (free-on-rails), against $489 a year ago.
Alan Brugler of A&N Economics told Agweb.com that soybean oil has been supported by a $5 rise in crude oil prices, but the bigger impact came from the EPA's proposed renewable fuel quotas, which support increased biodiesel use.
The EPA raised renewable fuel quotas by 67% from 2025 levels, to 5.61 billion gallons for 2026 and 5.86 billion gallons for 2027 — figures higher than the industry's recommendation of 5.25 billion gallons for 2026.
The US Department of Agriculture said domestic soybean oil prices have maintained a price premium following volatility caused by adjustments to the Renewable Volume Obligation (RVO). Brugler said: "Most of the increase in oil demand is being absorbed domestically within the United States, particularly in the biofuel sector, rather than through exports. That's positive for soybeans and will affect the new crop, pushing prices higher to reflect the expected rise in usage volumes."
BMI noted that expectations of ample global supply have helped cap prices, with global production expected to grow 5.2% year-on-year in 2024-2025. Although it expects soybean production to fall 1.01% in 2025-2026, it forecasts the supply surplus will rise to 5.2 million tonnes, compared with an expected 4.2 million tonnes for 2024-2025.
Brugler said soybean oil prices could reach 60 cents or lower "if oil prices remain elevated." November soybean contracts could rise as oil prices increase and planted acreage for 2025-2026 is expected to decline, pushing the floor price to $9 per bushel, with potential to reach $12 or more next year.
Meanwhile, BMI said China has announced a target to cut the soybean meal content in animal feed from 13% to 10% by 2030, which represents a drag on demand, alongside continued trade tensions with the United States — both seen as bearish factors for soybean meal prices.
Source: The Hindu Business Line