Material Insights · Understanding the Material World

Biodiesel (FAME) and Soybeans

Soybean oil, the smaller of the two products of crushing soybeans, is the main feedstock for biodiesel in the US and Brazil, and USDA expected biofuel makers to use more than half of US soybean oil in 2025/26. US blending volumes and Brazil's mandate therefore move the value of the oil, the crush margin and the soyoil available to importers such as India.

Biodiesel (FAME) (chemical) and Soybeans (commodity): 4 relationships.

How they are linked

1. Feedstock: soybean oil

Physical flow · Strong · Soybeans to biodiesel, via crushed oil

Soybeans are crushed into meal and oil, and the oil is reacted with methanol to make biodiesel; in the Americas soybean oil is the most available vegetable oil at scale.

  • 55.2% average soybean oil share of US biodiesel feedstock, 2011 to 2022
  • 1.43 billion lb soybean oil used by US biofuel makers in May 2026, a monthly record

Corn oil, the next largest US biodiesel feedstock, averaged only 11.2% over 2011 to 2022, so soybean oil is the dominant feedstock. Renewable diesel plants also compete for the same oil alongside fats and used cooking oil. Brazil raised its blend to 14% in March 2024 with 15% planned for 2025, and its domestic biodiesel market has since outbid exporters for soybean oil.

Sources: farmdoc daily, University of Illinois; Fastmarkets (EIA data); AgWeb, Pro Farmer

2. Price link: derived product

Cost and price · Strong · Both ways

The biodiesel proxy here is the soybean oil price itself, and the oil is part of the value of every crushed bean, so the bean price follows biofuel demand for the oil.

  • 0.56 monthly change correlation
  • 0.84 12-month change correlation
  • 0.71 fitted elasticity

The bean also carries meal, which is most of the weight of a crush and is priced by livestock feed demand, so bean prices move less than the oil. When biofuel policy lifts oil prices, crushers earn more per bean and crush more, which adds meal to the market and can weigh on meal prices.

Sources: Material Insights (World Bank, FRED, IMF data)

3. US RFS volumes and tax credit

Policy · Strong · US biofuel rules set soyoil demand

The Renewable Fuel Standard obliges refiners to blend set volumes of biomass-based diesel, and the 45Z credit and EPA's planned cut in credits for imports favour domestic soybean oil.

  • 9.07 billion RINs biomass-based diesel requirement for 2026, against 5.42 billion RINs in 2025
  • 15.5 billion lb USDA forecast of soybean oil used for biofuel, 2025/26, more than half of US output

EPA finalised record volumes for 2026 and 2027 in March 2026 and intends to reduce RIN credits for imports from 2028. Each physical gallon of biomass-based diesel earns about 1.6 RINs, so the 2026 requirement is about 5.7 billion gallons. Because the volumes are set by regulation, small refinery exemptions, court rulings or a change of administration can shift soybean oil demand quickly.

Sources: Hydrocarbon Processing (Reuters); American Farm Bureau Federation; farmdoc daily, University of Illinois

4. Fuel demand competes with food exports

Cost and price · High in India · American mandates tighten soyoil for importers

Soybean oil blended in the US or Brazil is not available for export, so higher mandates reduce the exportable surplus that edible oil importers draw on.

  • 5.47 Mt India's soybean oil imports in 2024/25, a record
  • 2.89 Mt of which from Argentina

Since Brazil announced its faster mandate rise at the end of 2023, its domestic biodiesel market has consistently outbid exporters for soybean oil. That makes Argentina, which supplied 2.89 Mt of India's 5.47 Mt in 2024/25, even more central to India's supply, so Argentine crush and export tax policy matter more.

Sources: AgWeb, Pro Farmer; UkrAgroConsult

For investors

Key learnings

  1. Soybean oil has become a policy-driven fuel feedstock in the US, so EPA volume decisions are now a major driver of soyoil prices alongside harvests.
  2. Biofuel demand raises the oil's share of crush value, which supports crush margins and expands meal supply at the same time.
  3. Rules that cut credits for imported fuels shift biofuel demand towards domestic soybean oil and away from imported used cooking oil and tallow.

What to track

  • EPA RFS volumes, small refinery exemptions and RIN prices: Higher volumes or fewer exemptions raise soybean oil demand (As issued, RINs daily · EPA EMTS data)
  • Soybean oil used for biofuels: A rising monthly figure confirms mandates are drawing oil out of food use (Monthly · EIA Monthly Biofuels Capacity and Feedstocks Update)
  • Board crush margin: A wider margin signals oil-led demand and more meal supply ahead (Daily · CBOT soybean, oil and meal futures)

For policymakers

Key learnings

  1. India's soybean oil supply comes mostly from Argentina and Brazil, where fuel mandates compete for the same oil.
  2. A US or Brazilian mandate change can raise India's edible oil import bill without any change in Indian demand.
  3. Domestic soybean crushing in India yields meal and oil together, so oilseed missions need markets for both to pay.

What to track

  • India's soybean oil imports by origin: A shift in origin mix shows where exportable surplus is shrinking (Monthly · Solvent Extractors' Association of India)
  • Brazil biodiesel blend level: Each point added removes soyoil from export markets (As decided · Brazil National Energy Policy Council (CNPE))

India

India imported a record 5.47 Mt of soybean oil in 2024/25, mostly from Argentina and Brazil, so biodiesel policy in the Americas feeds directly into India's edible oil prices.

Sources

  1. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  2. Biodiesel feedstock trends over 2011 to 2022, farmdoc daily, University of Illinois (2023)
  3. Biofuel demand to soak up more than half of US soyoil production next year, USDA says, Hydrocarbon Processing (Reuters) (2025)
  4. US soybean oil use for biofuels production hits record high in May, Fastmarkets (EIA data) (2026)
  5. EPA sets record renewable fuel volumes for 2026 to 2027, American Farm Bureau Federation (2026)
  6. Brazil's rising biodiesel mandate to slow soyoil exports, AgWeb, Pro Farmer (2024)
  7. India summarizes its vegetable oil imports for the MY 2024/25 (SEA data), UkrAgroConsult (2025)
  8. Rewriting the RFS playbook: final 2026 to 2027 RVOs for biomass-based diesel, farmdoc daily, University of Illinois (2026)