Domestic soybean oil usage in biomass-based diesel production paused its recovery in August as the industry awaits key blending mandates from the Environmental Protection Agency. Soybean oil usage totaled 1.041 billion pounds in August, down 67 million pounds from July, according to data from the Energy Information Administration released on Friday. The decline was largely due to a drop in usage for renewable diesel production.

Notably, waste feedstock usage of used cooking oil (UCO) and beef tallow fell sharply in August to 312 million pounds and 622 million pounds, respectively. Usage declined sharply ahead of the EPA’s announced biofuel blending mandates that are expected to disfavor imported waste products. Consequently, the share of soybean oil usage among other feedstocks rose to the highest since September 2023, as expected policies should favor domestic supplies. 

The EPA was initially set to release its finalized renewable volume obligations (RVOs) for 2026 and 2027 by Nov. 1, 2025. Additionally, it was supposed to finalize a potential reallocation of recent small refinery exemptions (SREs) from previous years by the same period. However, the government shutdown likely delayed a final rule for both. 

Soybean oil prices experienced pressure since this summer, with prices wiping out gains seen after the EPA initially proposed strong blending mandates that would heavily favor domestic soybean oil usage. December futures traded at the lowest since June 13 on Monday before rebounding of their lows. The 48-cent level may provide support for prices that could continue to incentivize domestic crush. 

Soybean crush margins came under pressure over the past two weeks due to the run-up in soybean prices on news of China returning to U.S. soy. If China truly begins buying volumes that the Trump administration is reporting, there could be a smaller focus on domestic crush.

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