Week in Review
Soybean oil was last week’s top performer, up 7.5% to trade above 45 cents for the first time since late February.
More than half of the gains came on Thursday alone as Reuters reported big oil and ag are teaming up seeking higher Renewable Fuel Standard blending obligations for biomass-based diesels.
Trump administration tells oil and biofuels groups to hash out new biofuel policy -Reuters
May oil gained 4% on Thursday - its largest one-day move since 45Z guidance was released the second week of January.
Why is bean oil so sensitive to biofuel policy headlines?
1. Biofuels = nearly 50% of demand:
2. Futures remain 40% higher than their pre-renewable diesel-era levels, largely driven by this new demand:
Plus, the way D4 RINs are nested in the RFS, it leaves soybean oil extra sensitive to perceived policy changes.
RINS, RFS, and policy - oh my! Get lost in all the biofuel jargon?
Me too!
Make sure you check out next week’s Wednesday HOT TAKE as I will be doing a Renewable Fuel Standard 101
Headline ‘fun’ facts
Since 2020, there have been 16 days bean oil fell more than 5%. Reuters printed a headline NEGATIVE to biofuel policy half of those days.
Over that same time, there have been 8 days bean oil rallied more than 5%. Reuters printed a POSITIVE biofuel policy headline 6 of those days. The other 2 were days immediately following Russia's invasion of Ukraine.
The problem at hand
The good news is, the recent boom in biomass-based diesel production has supported soybean oil futures, soy crush margins, and ultimately the bean market.
The bad news is biomass-based diesel RIN generation has outpaced RFS mandates, weighing on biofuel margins and soybean oil (hence the market’s positive reaction to reports of larger mandated volumes in 2026 and beyond).
According to Reuters, officials are considering larger biomass-based diesel mandates that reflect present production output, backed by both ag and petroleum interests - a move that the bean market, soy crushers, and biodiesel/renewable diesel producers all welcome with open arms.
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