KANSAS CITY — Despite CME soybean futures reaching three-year highs in early September and West Texas Intermediate crude oil values hovering near or above $100 per barrel in recent weeks, nearby soybean oil futures, which typically draw support from both markets, largely have remained rangebound since mid-July, trading mostly between the mid-60¢ and mid-70¢ per lb range.
Several factors have helped soybean oil futures decouple from peripheral influences, but the dominant driver has been the fundamental balance between supply and demand. After the Environmental Protection Agency (EPA) set record-high biomass-based diesel mandates under the Renewable Fuel Standard (RFS) for 2026 and 2027 and signaled that imported feedstocks would continue to receive full credit value through at least 2028, biofuel producers ramped up imports of feedstocks and vegetable oils.
Imports of finished biodiesel also surged as the fuel generated valuable Renewable Identification Numbers (RINs), which obligated parties can use or sell to comply with the RFS mandates. From January to March, the period before the EPA announced the new mandates, imports of finished biodiesel totaled approximately 39,164 tonnes, according to data compiled by the US Department of Agriculture’s Foreign Agricultural Service. But from April through June, the period following the announcement, imports jumped to 79,764 tonnes.
The combination of robust imports of biofuel feedstocks and finished biodiesel and expanding domestic soybean oil production produced a surplus of available supplies that dampened price gains. That oversupply helps explain why seasonal downtime at soybean processing plants has had a limited effect on soybean oil futures, even as soybean meal futures have responded more aggressively to tighter nearby availability.
“The soybean oil market is finding a well-defined parameter,” one trade source said. “Every time we get between 71¢ and 72¢, the market shuts down, and the same thing is true when the price drops between 65¢ and 67¢. The end user wants to own it at that level because he knows that whatever happens with the administration, the RFS program is not going away.”
While the RFS program may not go away, its implementation may continue to evolve. The EPA’s recent decision to grant compliance exemptions to several small refineries has nonetheless injected uncertainty into near-term biofuel demand expectations, helping keep soybean oil futures confined to their recent trading range.
