On 13 June 2025, the US Environmental Protection Agency proposed record blending volumes under the Renewable Fuel Standard for 2026 and 2027. The headline number surprised the market: 5.61 billion gallons of biomass-based diesel in 2026, a 67% increase on the 3.35 billion gallons required for 2025. The EPA also proposed to cut by half the credits generated from imported feedstocks.

Chicago soybean oil futures rose by the daily limit on the day of the announcement and gained about 17% in two sessions.

A structural change in the crush

For most of the past 30 years, soybeans were crushed mainly for meal, used in animal feed, with oil treated as a by-product. That relationship is changing. Renewable diesel and biodiesel policies in the Americas and Asia are turning vegetable oil into an energy commodity, and the oil share of the crush value has risen sharply.

The consequences reach well beyond the United States:

  • More crushing, more meal. Processors are expanding capacity to capture oil demand. This produces more soybean meal, which must find a home in export markets. Meal prices have been under pressure, which is good news for feed buyers in Asia.
  • Less oil for export. As more domestic oil is used for fuel, less is available for food markets. Importers increasingly rely on South American soybean oil and Southeast Asian palm oil.
  • Feedstock competition. The proposed import penalty favours domestic oils and could push used cooking oil and tallow from abroad toward other markets.

What we are watching

The proposal must still be finalised, and the level of exemptions granted to small refineries will be decisive. Tax credit changes that favour North American feedstocks are also adding to the domestic pull on soybean oil.

Our view

The link between energy policy and oilseeds is now one of the most important drivers of the market. We expect firm vegetable oil prices and comfortable meal supply to coexist for some time. For our clients, it means separate strategies for oils and meals, and closer attention to policy calendars. DBI Resources monitors these developments daily.

Sources: US Environmental Protection Agency, proposed RFS volumes, 13 June 2025; CBOT market data.