The State of Soy

December 31, 2025

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by Susanne Retka Schill (Biodiesel Magazine) The soybean supply chain looks to proposed biofuel polices for hope in the midst of what’s been described as one of the most challenging years ever. For biofuel producers, the uncertainty around final rules and another year of underwhelming volume targets under the Renewable Fuel Standard brought many to the brink. For soybean growers, the year’s challenge came from uncertainty around tariffs and the trade war with China, layered on top of sinking prices and increasing input costs.

Farmers and biofuel producers are caught in a bigger chess game, says Grant Kimberley. “The tariffs are all about big picture things, and not a lot to do with agriculture, but when countries want to retaliate, we’re the ones catching the shrapnel. A lot of trade deals are about rare earth metals and aluminum, selling airplanes, restoring domestic manufacturing. We’re hopeful some increased sales for agriculture products too,” he says. Kimberley experiences the challenges from multiple directions in his roles as executive director of the Iowa Biodiesel Board, director of market development for the Iowa Soybean Association and as a farmer himself.

The threat of a trade war with China meant growers shifted acres into corn last spring, Kimberley says, which should have strengthened markets some if it hadn’t been for the uncertainties. “Markets hate uncertainty,” Kimberley says, noting that the last trade war spanned two years.

Alexa Combelic, executive director of government affairs for the American Soybean Association, points outs that China had already purchased enough soybeans by late October to get them though the end of the calendar year. “We generally export soybeans to China from the beginning of our harvest season—late August and September through about the end of January early February,” she says. “That is the time when Brazil's harvest comes online, and when China makes a natural shift from U.S. purchases to Brazilian purchases.”

The U.S. and China reached an agreement in late October that should help the trade situation for soybeans, with China pledging to buy 12 million tons through January, followed by an annual 25 million tons.

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China’s dominance as a soybean market, however, is tough to match.

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Brazil soybean production poses the biggest long-term challenge for U.S. soybean growers, having exceeded U.S. production in 2018, Kimberley adds.

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Basis Impacts
The biggest impact of the trade war was on farm gate prices, Kimberley says.

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North Dakota had two new crushers come online this year, bringing hope of improved basis, something soybean growers across the country are looking for, says Combelic.

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Crushers are operating below capacity right now, she adds, because their expansion plans anticipated growth that didn’t happen when the U.S. EPA underestimated the capacity expansion that actually occurred, setting the 2023-25 renewable volume obligation targets too low.

Hope in Proposed Policies
Midsummer, EPA announced proposed RVOs that promise to better align with capacity. Layered on top of changes to the 45Z Clean Fuel Production Credit in the One Big Beautiful Bill, it greatly improved the soybean supply chain outlook, although the uncertainties surrounding the final rules meant few benefitted from that promise last year.

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The proposed half-RIN would harmonize the Renewable Fuel Standard with the measure included in Congress’ One Big Beautiful Bill to amend the 45Z Clean Fuel Production Tax Credit to disqualify imported fuels and feedstocks, while allowing Mexican and Canadian participation.

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However, while removing ILUC from the equation will help soybean in 45Z, it won’t impact the California Low Carbon Fuel Standard.

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A year ago, the flood of UCO imports from China was the big story. With the proposed half RIN and imported feedstocks not qualifying for 45Z, China UCO imports “started to pull back,” says Brian Murphy, general manager of Mahoney Preferred Oil. “There still is a lot of Chinese UCO that gets imported to the United States, but the fuel doesn't get sold domestically, it gets re-exported mostly to the European Union. So, it is taking up space in the RD platform as far as run rates.”

Europe is the destination for RD from U.S. UCO as well, Murphy adds. “Mahoney is now ISCC certified [a required sustainability certification for the EU market]. And because margins for RD and biodiesel producers are not good for making domestic fuel and selling it domestically with a RIN, a lot of it is going to Europe.”

“The cloud hanging over us is trade talks with China and the finalized RVO,” Murphy adds.

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45Z Delay
While there’s some indication the RVO will be finalized early in the year, guidance for 45Z isn’t expected for some time.

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“There's essentially no guidance,” says Joe Jobe, CEO of Sustainable Advanced Biofuel Refiners, which is focused on biodiesel. “They put out a notice of intent last January to issue a proposed rule, but they haven't issued a proposed rule.” That lack of implementing regulations has nearly shuttered the industry, Jobe tells Biodiesel Magazine. “Folks are running at maybe half or less of their production capacity. They're shutting on and off, mostly just to keep their pipes warm and a few of their major customers happy, and most importantly, to keep their labor force.” The changes to 45Z in the One Big Beautiful Bill essentially started the clock over on getting a proposed rule, he adds.

What is known, however, is that the 45Z program will be way more complicated than the blenders tax credit it replaces, which provided a $1 tax credit for each gallon. For 45Z, a producer will have to show a plant-specific, feedstock-specific carbon intensity.

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“If we were to extend the 40A blenders tax credit for even a short term period of six months or until 45Z has implementing regulations in place, it would turn the light switch back on immediately. So many elements throughout the value chain and so many industries are taking an economic hit because of these delays.” READ MORE

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used cooking oil (UCO)/yellow grease Transportation Fuels Policy Trade Policy tax policy tax credits tariffs Sustainability supply chain soybeans soybean prices RINs (Renewable Identification Numbers) renewable volume obligation (RVO) Renewable Fuel Standard (RFS and RFS2) Renewable Diesel/Green Diesel/HVO/Paraffinic Diesel Regulations-State Regulations-Federal North Dakota markets/sales market forces LCFS (Low Carbon Fuel Standard) Iowa International Sustainability and Carbon Certification model(ISCC) ILUC (Indirect/Induced Land Use Change) funding Financing feedstock prices European Union (EU) EPA (Environmental Protection Agency) corn/maize China Carbon Intensity (CI)/Carbon Footprint California Brazil BioRefineries/Renewable Fuel Production biodiesel Agricultural Policy 45Z Clean Fuel Production Tax Credit 40A Biodiesel and Renewable Diesel Tax Incentive

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