USDA: Biofuel demand will absorb more than half the US soyoil crop in 2019.
The U.S. Department of Agriculture announced on Friday that U.S. biofuel producers will consume more than 50% of the soybean oil produced here in the United States by next year. A recent flurry of federal policies has transformed the industry, including increased blending mandates as well as curbs on imports of foreign biofuels and feedstocks.
In its monthly report on supply and demand, the USDA has raised its expectations for the use of soybean oil by biofuel producers during the 2025/26 year marketing period, which starts October 1, up to a record 15.5 billion pounds. This is an increase of 11.5% compared to its forecast one month earlier, and 26.5% more than the current year marketing period.
U.S. exports of soyoil are expected to fall from 2.6 billion lbs in the current season to 700 million lbs in 2025/26, as domestic oil consumption increases.
Last month, the U.S. Environmental Protection Agency proposed that oil refiners increase the amount biofuels they must blend in the nation's fuel mixture in 2026 and in 2027. This was primarily due to a rise in biomass-based Diesel mandates as well as measures to discourage imports of biofuel.
After months of policy indecision, the biofuels industry welcomed the move.
The Renewable Fuel Standard requires refiners to either blend biofuels in large quantities into U.S. gasoline or buy credits, known as RINs, from those who do.
The USDA announced on Friday that "EPA has not only raised the mandates, but proposed to reduce the amount of Renewable Identification Numbers generated for imported renewables fuels and for renewable fuels made from foreign feedstocks beginning in 2026. This will increase demand for domestically-produced feedstocks such as soybean oil."
The USDA stated that additional incentives through state biofuel mandates, and the federal 45Z tax credit for clean fuel production in President Donald Trump’s recently passed budget law in the U.S. further fueled the outlook of soyoil's use in biofuel.
Benchmark Chicago Board of Trade Soyoil Futures firmed up on Friday. They are hovering below the 7-1/2 month peak reached on June 23.
(source: Reuters)