Growing biofuel use boosts soybean crush and farm prices
Soybean oil is becoming one of the most important products in the U.S. agricultural sector as demand from the biofuel industry continues to grow.
For many years, soybean oil was mainly used in food products such as cooking oils, salad dressings, margarine, and bakery ingredients. It was also used in several industrial products. While these traditional uses remain important, a major shift is taking place as biofuel producers increasingly rely on soybean oil as a key feedstock.
According to USDA projections, soybean oil is now playing a larger role in the production of biodiesel, renewable diesel, and sustainable aviation fuel. Demand for these fuels has increased steadily over the past two decades and has accelerated in recent years because of supportive Federal and State policies.
The trend is expected to continue after the U.S. Environmental Protection Agency announced record-high Renewable Volume Obligations for 2026 and 2027. These requirements encourage greater biofuel production and increase the need for feedstocks such as soybean oil.
As a result, soybean oil use for biofuel production is forecast to reach 17.8 billion pounds during the 2026/27 marketing year. This would represent more than half of all domestic soybean oil consumption, marking a significant milestone for the industry.
The growing biofuel market is expected to have a positive impact throughout the soybean supply chain. Strong demand for soybean oil is forecast to push prices to record levels during the 2026/27 marketing year. Higher prices are also expected to encourage increased soybean processing activity across the country.
To meet future demand, the United States has expanded its soybean crushing capacity between 2021 and 2026. New and upgraded processing facilities are helping the industry handle larger soybean volumes and produce more soybean oil and soybean meals.
The increase in crushing activity is expected to support soybean farmers by creating additional demand for their crops. Greater soybean processing, combined with stable export opportunities, is expected to strengthen the soybean market.
USDA forecasts the U.S. season-average soybean farm price at $12.00 per bushel for 2026/27. If realized, it would be the highest average farm price since the 2023/24 marketing year.
The outlook highlights the growing connection between agriculture and renewable energy. As demand for cleaner fuel options continues to expand, soybean oil is expected to remain a critical feedstock for the biofuel sector.
For soybean growers, processors, and rural communities, increasing biofuel production presents new opportunities for growth. With supportive policies, expanding processing capacity, and strong demand, the soybean industry is positioned for continued strength in the years ahead.
Photo Credit: USDA