Soybean futures surged as the Environmental Protection Agency (EPA) proposed a significant increase in biofuel blending requirements for 2026 and 2027. The proposal, released on Friday, calls for a record 24.02 billion gallons of biofuels to be blended in 2026, with biomass-based diesel jumping from 3.35 billion gallons in 2025 to 5.61 billion gallons in 2026 and further increasing to 5.86 billion gallons by 2027. The announcement had an immediate impact on the markets.
July soybeans closed up 27 1/2 cents at $10.69 3/4, while November soybeans rose by the same margin, closing at $10.54 3/4. July soybean oil hit the daily limit, closing up 3 cents per pound at 50.61 cents per pound. July corn also saw gains, ending the day up 6 cents at $4.44 1/2.
DTN Lead Analyst Rhett Montgomery described the proposal as a “welcomed event after months of uncertainty for the biofuel industry and by extension the ag industry.” He noted that federal guidance for biofuels was the missing demand piece, particularly in the soybean oil market, where exports are already impressive.
Biofuel proposal boosts soybean futures
The proposed Renewable Fuel Standard (RFS) volumes maintain conventional corn-based ethanol at 15 billion gallons for the next two years, marking a notable increase compared to the Biden administration’s rule, which had set biomass-based diesel at 3.35 billion gallons for 2025.
The biofuel industry has been advocating for higher RFS volumes to align with actual production capabilities, especially as biodiesel plants have been cutting back or closing due to tax uncertainty. Devin Mogler, president and CEO of the National Oilseed Processors Association, welcomed the proposal’s reduction in the number of renewable identification numbers (RINs) generated for imported renewable fuels and those produced with foreign feedstocks, citing it as critical in reducing the displacement of U.S. soybean oil by imported alternatives. Caleb Ragland, president of the American Soybean Association, stated that the significant increase in proposed volumes for biomass-based diesel will support soybean farmers, processors, and biofuel producers in rural America.
Industry leaders, including Kurt Kovarik from Clean Fuels Alliance America, Geoff Cooper from the Renewable Fuels Association, and Emily Skor from Growth Energy, praised the proposal as a timely signal and an economic lifeline for producers and agricultural businesses. The EPA also addressed small-refinery exemptions, noting that while total volume requirements remain, the percentage obligations for non-exempt obligated parties increase when exemptions are granted. The agency is still determining how it will evaluate these petitions for 2026 and 2027.
As the markets continue to react to these developments, traders are closely monitoring other commodities for potential ripple effects, with the energy and agricultural sectors remaining particularly volatile due to external factors such as geopolitical events and climate conditions.