NASHVILLE, TENN. (RFD NEWS) — Uncertainty surrounding federal biofuel policy is shaping the expansion of renewable diesel and soybean demand, according to Terrain economist Bree Baatz, with major implications for crush margins and farm-level pricing opportunities.
On the other hand, expanded soybean crush capacity in Kansas is creating stronger local markets and improved pricing opportunities for farmers, as new and upgraded processing facilities reshape regional demand.
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Renewable Diesel Policy Uncertainty Clouds Soybean Crush Outlook
Renewable diesel has become a major driver of U.S. soybean oil demand because it can directly replace petroleum diesel without blending, but production fell sharply in 2025 as shifting tax credit rules and unclear federal guidance disrupted plant operations and feedstock demand. Baatz notes that the transition from blender to producer tax credits, along with unresolved questions about eligibility, slowed investment and left capacity underutilized.
For producers, feedstock competition remains a key issue. Renewable diesel can be made from soyoil, canola oil, corn oil, tallow, and used cooking oil, with lower-carbon imported fats often favored due to better credit economics and port-based plant logistics. Baatz estimates soybeans have lost roughly 375 million bushels of demand over the past three crop years as market share shifted toward substitutes.
Regionally, state-level policies continue shaping demand. California’s Low Carbon Fuel Standard remains the dominant force, though its carbon-scoring structure and limits on vegetable-oil feedstocks could cap soyoil’s growth even as federal incentives improve. The result, Baatz says, is a market both supported and constrained by policy.
Looking ahead, Baatz expects stronger crush demand later in 2026 if federal and state rules align, potentially tightening basis and improving pricing flexibility for farmers located near crush and renewable diesel facilities.
Kansas Soybean Crush Expansion Strengthens Local Market Opportunities
Two soybean processing plants that came online in fall 2024 nearly doubled Kansas crush capacity, and Kansas Soybean recently honored Scoular and Bartlett — a Savage Company — for expanding marketing options and profit potential for producers.
The new Bartlett facility in Cherryvale alone crushes about 145,000 bushels per day, supplying meal primarily to the poultry sector in northwest Arkansas and to export customers in Mexico, while directing oil to food processors and renewable fuel markets.
For producers, the most immediate impact has been stronger basis levels. Farmers delivering near the Cherryvale plant reported basis improvements of roughly 4 to 6 cents compared with local cooperative bids, highlighting the advantage of nearby processing demand.
Regionally, Scoular’s retrofitted Goodland facility is expanding soybean opportunities in western Kansas by reducing logistical barriers and encouraging acreage growth beyond traditional growing areas.
Looking ahead, industry leaders expect added domestic processing tied to renewable fuels and feed demand to stabilize soybean markets while keeping more value-added activity closer to the farm gate.
