Soybean oil prices in Chicago rose 6% and will continue to rise amid proposals to increase biofuel production in the US and a jump in oil prices

July soybean oil futures in Chicago rose 6% to $1,112/t on Friday (+3% for the month) and have now reached $1,164/t (+11% from Thursday) amid a sharp 7% jump in oil prices caused by Israeli strikes on Iran and the US government’s decision to sharply increase US biofuel production mandates for 2026 and 2027 by more than producers had requested.

August Brent crude futures rose 11% on Friday amid the open war between Iran and Israel, but closed the session up 7.26% to $74.1/barrel. The information that Iran has invited negotiations and is ready to abandon the development of nuclear weapons has reduced the speculative impact on oil quotes.

The U.S. soybean and soybean oil market received a significant boost on Friday as the U.S. Environmental Protection Agency (EPA) released a long-awaited proposal to commit to renewable biofuel production of 7.12 billion RINs (approximately 5.61 billion gallons) by 2026 and 7.50 billion RINs (approximately 5.86 billion gallons) by 2027, significantly exceeding the 3.35 billion gallons set for 2025 and the 5.5 billion gallons proposed by the oil and biofuel industries by 2031.

In doing so, the EPA is proposing changes to the Renewable Fuel Standard (RFS) for 2026 and 2027, which include the following proposals:

• Transition to RIN equivalents. For the first time, all RVOs, including biodiesel (BBD), will be measured in RIN equivalents (one RIN equals one gallon of renewable ethanol-equivalent fuel).
• Significant increase in BBD volumes. For 2026, an increase in advanced biofuel volumes is proposed – 9.02 billion in 2026 and 9.46 billion ethanol-equivalent gallons in 2027, which is also more than in 2025.
• Reducing the cost of RINs for imports: Foreign biofuels and feedstocks will only count as 50% of the RIN cost compared to US production, which will reduce dependence on imported feedstocks and help increase domestic consumption of soybean oil.
• Revise equivalence values for hydrotreated biofuels. It is proposed to lower the equivalence value for renewable diesel to 1.6, and to set values for renewable oil (1.4) and renewable jet fuel (SAF) (1.6), taking into account the presence of fossil hydrogen.

The EPA’s proposals are seen as an important step towards strengthening the domestic biofuel market and ensuring US energy security, which will support the growth of domestic demand for soybeans, which is especially important in the event of China’s refusal to import American soybeans.

At the same time, imports of canola oil from Canada and waste oil from China, which are used to produce biofuels in the US under RIN mandates, will come under pressure.

Such a change could significantly adjust soybean oil prices in the US, and futures on the Chicago Board of Trade will not reflect global soybean oil trends, but only domestic American dynamics, so traders will have to focus more on physical market prices in South America and Europe.