US Biofuel Producers Fuel Record Soybean Oil Demand Amid Policy Uncertainty

US biofuel producers have reached a record high in soybean oil consumption for May, defying falling futures prices and uncertainty over federal renewable fuel policy. According to data from the US Energy Information Administration (EIA), the industry used 1.43 billion pounds of soybean oil in May, up 17% from April. This represents more than 39% of the total US biofuel feedstock pool, surpassing its previous high of 36% a month earlier.

The increased demand for soybean oil was driven by renewable diesel producers, who accounted for 687 million pounds (+28% month on month), and biodiesel manufacturers, who consumed another 747 million pounds (+9%). Meanwhile, consumption of other feedstocks also rose: used cooking oil demand climbed 28% to 605 million pounds, the highest level since October 2024, while tallow consumption increased by more than 20% to 796 million pounds.

Despite the record physical demand, soybean oil futures remain under pressure. The September contract on the CME lost more than 8% over the week as traders weighed the potential expansion of Small Refinery Exemptions (SREs), which could reduce renewable fuel blending requirements and weaken future demand for soybean oil.