Soybean oil prices fall amid new US biofuel proposals

Soybean oil futures on the Chicago Board of Trade (CBOT) extended their decline on October 14 amid uncertainty over US biofuel policy and increasing supplies of newly harvested soybeans. The December contract fell by 1.34% to 67.11 cents/lb during the first half of the trading session, down 4.24% from the previous session’s intraday high. On October 13, prices had climbed to 70.08 cents/lb before closing at 68.02 cents/lb, down 0.89%.

The main factor weighing on the market was a new proposal announced by the US Environmental Protection Agency (EPA) on October 13. The agency proposed reallocating approximately 770 mln Renewable Identification Numbers (RINs) associated with exemptions granted to small refineries from renewable fuel obligations. The total volume of exemptions for 2025 amounted to 1.76 billion RINs, compared with the previously anticipated 990 mln. The reallocation is intended to preserve renewable fuel requirements, supporting demand for feedstocks used in biofuel production, particularly soybean oil.

The EPA is considering two options for implementing the proposal: distributing the additional obligations equally between 2026 and 2027 or assigning the entire volume to 2027. No final decision has been made, and the public comment period will remain open until December 4. According to market participants, full reallocation had already been largely priced in, limiting the proposal’s ability to provide sustained support for futures. Instead, uncertainty over the implementation timeline increased volatility in soybean oil prices.

Additional pressure on the market is coming from the accelerating US soybean harvest. According to USDA, as of October 11, American farmers had harvested 46% of soybean acreage, compared with 25% a week earlier. However, harvesting progress remains below the five-year average of 50%. Increasing arrivals of newly harvested soybeans are accompanied by more active commercial hedging, adding downward pressure on oilseed futures.

The recent price decline highlights the US soybean oil market’s sensitivity to government regulation of the biofuel sector. On October 7, December CBOT soybean oil futures had already fallen by 3.19% in a single trading session, settling at 67.68 cents/lb. Future price movements will largely depend on the EPA’s final decisions regarding the allocation of biofuel obligations between 2026 and 2027, as well as the pace of new soybean crop deliveries and demand from the processing industry.

Tags: soybean oil, prices, biofuel, global market