NASHVILLE, Tenn. (RFD News) — U.S. soybean oil demand is expected to increase during the 2026/27 marketing year as federal biofuel policy continues driving growth in biomass-based diesel production.
According to USDA’s Economic Research Service (ERS), record Renewable Volume Obligations for 2026 and 2027 are expected to boost demand for biofuel feedstocks.
ERS says changes tied to the 45Z tax credit are also reshaping the feedstock outlook by limiting eligibility to fuel produced in the United States using feedstocks sourced from North America.
The updated policy also removes indirect land-use change from carbon score calculations, something USDA says should benefit soybean oil demand.
USDA forecasts soybean oil use for biomass-based diesel production at 17.8 billion pounds in 2026/27, up 3.6 billion pounds from the current marketing year.
Canola oil demand is also expected to increase.
Meanwhile, renewable diesel production capacity has expanded rapidly in recent years, growing from 900 million gallons in early 2021 to 5 billion gallons by the end of 2025.
ERS says that expansion is increasing competition for vegetable oils, animal fats and used cooking oil.
USDA projects Central Illinois soybean oil prices at 70 cents per pound, up from 63 cents previously.
