Crude Oil, 45Z Uncertainty, and RisingU.S. Soybean Oil Prices

By Ming Wang and Frayne Olson

In early 2026, United States (U.S.) soybean oil prices had become a closer focus of market attention as biofuel policy uncertainty and firmer energy prices bolstered the U.S. market. Heightened geopolitical tensions in the Middle East added to volatility in oil markets, which spilled over into soybean oil through its close link to biofuel demand. Against this backdrop, the divergence in U.S. soybean oil Free on Board (FOB) prices across major export origins became more notable.

Figure 1 tracks daily FOB soybean oil prices for Brazil, Argentina, and the U.S. Gulf from January 2025 through March 2026. From January through May 2025, prices across all three origins moved closely together, generally trading within a range of roughly $950 to

$1,100 per metric ton. During this period, the U.S. Gulf maintained only a modest premium over Brazilian and Argentine quotations, broadly consistent with normal seasonal patterns and logistical differentials.

A first major divergence emerged between June and September 2025, when U.S. Gulf soybean oil prices rose to around $1,350/mt, roughly $250/mt above South American levels. This increase followed Environmental Protection Agency’s (EPA) June 2025 proposal for higher Renewable Fuel Standard (RFS) renewable volume obligations (RVOs), including biomass-based diesel requirements equivalent to 5.61 billion gallons in 2026 and 5.86 billion gallons in 2027, up from 3.35 billion gallons in 2025. Higher proposed blending volumes strengthened expected demand for biofuel feedstocks, supporting soybean oil prices. The proposal also introduced a structural break from previous RFS regulations, stipulating that biofuels produced using imported or foreign-sourced feedstocks would receive only half the Renewable Identification Number (RIN) credits of those made from U.S.-based feedstocks. This made domestically sourced soybean oil more attractive to blenders seeking to maximize compliance credits per gallon produced. By October and through December 2025, prices across all three origins had largely reconverged near $1,050–$1,175/mt as final RVOs had not yet been released, uncertainty over 45Z and blending economics weighed on the market, and buying became increasingly hand-to-mouth.

Figure 1: Soybean Oil FOB Prices for U.S. and Major Exporters, as of March 26, 2026.

Source: NDSU using data from Fastmarkets.

A second, sharper divergence emerged in late February and early March 2026, when U.S. Gulf soybean oil prices moved decisively above Brazilian and Argentine FOB prices. The divergence coincided with a rebound in crude oil prices amid escalating geopolitical ten-sions in the Middle East. Higher crude oil prices improved biodiesel and renewable diesel margins and raised short-term demand expectations for vegetable-oil-based feedstocks, lifting soybean oil prices more broadly. In the United States, that upward pressure was reinforced by existing expectations of stronger biofuel demand. The U.S. Department of Agriculture’s (USDA) February Grains and Oilseeds Outlook (USDA, 2026a) projected soybean oil use in biofuel production at 17.3 billion pounds in 2026/27, up 2.5 billion pounds from the prior year, and forecast soybean oil prices at 58 cents per pound, more than 10 cents above the 2023/24 level. Rising crude oil futures likely provided additional support through speculative spillovers from energy markets, drawing broader buying into commodity futures and index-linked positions.

Soybean oil prices in Brazil and Argentina also increased during this period as firmer crude oil prices lifted the broader vegetable oil complex. However, gains were smaller than in the United States. In South America, seasonal harvest and crushing activity continued to expand, keeping prices more closely anchored to export availability and limiting their sensitivity to developments in the energy sector. In contrast, U.S. soybean oil prices responded more strongly to crude oil market movements because a much larger share of domestic soybean oil is linked to fuel use, while only a small share is exported.

Looking ahead, the trajectory of U.S. Gulf soybean oil prices will depend on how several forces evolve over the coming months. On the policy side, greater clarity on the 2026-2027 RVOs and implementation of the 45Z Clean Fuel Production Credit will be critical for determining whether current price strength translates into sustained domestic biofuel demand. At the same time, soybean oil use has not kept pace with production in recent years, contributing to elevated stocks over the past three years. Although the March World Agricultural Supply and Demand Estimates (WASDE) slightly lowered projected soybean oil production through a lower extraction rate (USDA, 2026b), it will be important to monitor whether production is revised down further and whether stocks continue to accumulate. Outside the United States, developments in crude oil prices, South American harvest and crushing progress, and export demand supported by recently signed trade agreements, such as those with India, will continue to shape relative price movements across origins.

References

USDA (2026a). Agricultural Outlook Forum: Grains and Oilseeds Outlook. Outlook Report. U.S. Department of Agriculture. https://www.usda.gov/sites/default/files/documents/2026AOF-grains-oilse eds-outlook.pdf.

USDA (2026b). World Agricultural Supply and Demand Estimates. WASDE Report 669. U.S. Department of Agriculture. https://www.usda.gov/oce/commodity/wasde/wasde0326.pdf.