US Biofuel Mandates Boost Domestic Soybean Oil Use, Slash Exports

The U.S. agricultural sector is undergoing a profound transformation, with federal energy policy redirecting key commodities towards domestic biofuel production. This profound shift is acutely demonstrated by the U.S. biofuel sector’s projected consumption of over half of the nation’s total soybean oil output in the coming year. This strategic reallocation, propelled by enhanced blending mandates and restrictions on foreign feedstocks, signifies a pivotal transformation for both agricultural commodity markets and the broader renewable energy sector.

• The U.S. biofuel sector is projected to consume over half of the nation’s soybean oil output next year.
• The USDA forecasts biofuel producers will utilize a record 15.5 billion pounds of soybean oil in the 2025/26 marketing year.
• U.S. soybean oil exports are expected to plummet by over 70% in 2025/26 due to increased domestic demand.
• The EPA has proposed significant increases in biofuel blending mandates for 2026 and 2027.
• New policies will reduce Renewable Identification Numbers (RINs) for imported renewable fuels starting in 2026.

Quantifying the Shift: Record Biofuel Demand

The U.S. Department of Agriculture (USDA) forecasts that biofuel producers will utilize a record 15.5 billion pounds of soybean oil during the 2025/26 marketing year. This volume represents an 11.5% increase from previous estimates and a substantial 26.5% rise compared to the current year’s consumption. This robust demand from the biofuel sector is set to significantly reshape traditional trade flows. Consequently, U.S. soybean oil exports are projected to plummet to 700 million pounds in 2025/26, a sharp decline from 2.6 billion pounds, unequivocally signaling a prioritization of domestic demand.

Policy Drivers: EPA Mandates and Import Restrictions

This notable surge in domestic utilization stems directly from recent regulatory actions undertaken by the U.S. Environmental Protection Agency (EPA). Specifically, the EPA has proposed significant increases in biofuel blending mandates for oil refiners for the 2026 and 2027 calendar years. Crucially, these heightened mandates are coupled with policy measures designed to reduce Renewable Identification Numbers (RINs) for imported and foreign-sourced renewable fuels, effective starting in 2026. This comprehensive policy framework, operating under the Renewable Fuel Standard (RFS), explicitly aims to bolster demand for domestically produced feedstocks such as soybean oil.

Industry Reception and Incentives

The ensuing policy clarity, further complemented by various state-level biofuel mandates and the federal 45Z clean fuel production tax credit, enacted under the budget during President Donald Trump’s administration, has been largely met with approval by the burgeoning U.S. biofuels industry. These combined incentives have effectively alleviated prior market uncertainties that had previously constrained the output of fuels derived from vegetable oils. Market reaction to these developments has been notably positive, with benchmark Chicago Board of Trade (CBOT) soybean oil futures firming near their recent peak levels.