U.S. Biofuel Boom: What’s Driving Record Soybean Crush, and Will It Fuel Higher Prices?

July 29, 2026

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by Tyne Morgan (AgWeb) Data shows soybean crush and renewable diesel output are hitting all-time highs, driven by strong domestic biofuel policy, while new U.S. tariffs on Brazilian tallow add fresh demand in the biofuel feedstock market.

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According to Susan Stroud, founder and CEO of NoBull Agriculture, the historic run in soybean crush isn’t a market accident. She says it’s the direct result of a change in federal policy.

Policy Is the Driver
Stroud points to EPA’s Renewable Volume Obligation (RVO) for 2026 and 2027, finalized at the end of March, as the catalyst behind the surge in production.

“EPA gave us the record large RVO for 2026 and 27 finally at the end of March, and we are finally starting to see the result of some of that,” Stroud says. “The RVO is large enough that it requires producers in the U.S. biodiesel and renewable diesel [industries] to effectively run at maximum capacity.”

And Stroud doesn’t expect the momentum to slow down anytime soon. As more plants come online, that should open the door for even high soybean crush.

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“It already is [impacting prices]. It’s providing a lot of underlying support for the soybean market,” Stroud says. “Now we’re seeing it in combination with China finally coming back and beginning to buy some of that 25 million metric tons that they are supposed to for this coming marketing year. So it’s all of these things kind of colliding at once.”

Stroud also pointed to unexpected support coming from the energy markets. Russia’s recent export restrictions have sent shockwaves through diesel and heating oil markets, further boosting biofuel economics.

“We’re seeing a lot support, especially coming because of the diesel market, heating oil had rallied so much over the course of the past month and a half since Russia put export restrictions in place,” Stroud says. “That’s providing a lot of additional support for soybean oil, and it’s pushed renewable fuel margins even to higher levels than they were previously.”

45Z Credit Reshaping the Landscape... For Corn, Too
Stroud says the 45Z Clean Fuel Production Credit has been a major driver of the biofuel boom well before recent geopolitical developments entered the picture.

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“Ethanol is one thing that we haven’t talked a lot about. There’s some expansion going on that’s under the radar, but it’s because they have strong margins and they have the incentive to produce,” Stroud says. “Soy crush has been taking all of the focus, but this has really been underlying, quite supportive for ethanol, too.”

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More Crush Capacity Needed to Keep Pace, Says AgResource’s Dan Basse

Even with records falling, the industry may still be playing catch-up on infrastructure, according to Dan Basse, founder and president of AgResource Company.

“I believe this is just a start,” Basse says. “The problem being is if I get about 2.8 billion bushels of soybeans annually, I need more investment in crush facilities.”

Basse says today’s strong margins should help spur that investment, but the payoff won’t be immediate, as new crush capacity takes years to come online.

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“I’m still hopeful maybe we’ll get E15 on a voluntary basis for corn,” Basse says. “So all of this is really hitting at the right time.”

Tariffs on Brazilian Tallow Add Another Bullish Layer

Trade policy is now reinforcing the same bullish story. Soybean oil futures jumped earlier this month on a combination of trade and biofuel news, as Washington confirmed steeper tariffs on Brazilian goods just as new EIA production data showed how tight the U.S. biomass-based diesel feedstock market has become. At the center of the move is beef tallow, which is a key renewable diesel feedstock that was left off the list of tariff exclusions.

The U.S. Trade Representative finalized a 25% Section 301 tariff on a wide range of Brazilian imports effective July 22, citing unfair trade practices that include restrictions on U.S. ethanol access, digital-trade issues and illegal deforestation. The new rate replaces a temporary 10% duty under Section 122 that was set to expire late this month. While beef and orange juice were carved out of the tariff, tallow was not.

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The main risk to the bullish case is on the demand side, though. If higher feedstock costs squeeze renewable diesel margins, producers could respond with run cuts that blunt some of the added vegetable-oil demand. READ MORE

Related articles

ADM to expand North America crush capacity amid strong biofuel demand (ADM/Biobased Diesel Daily)
Soy demand rises to meet large crop (American Soybean Association/Biobased Diesel Daily)

Excerpt from ADM/Biobasd Diesel Daily: The company will initially focus efforts with investments at four U.S. production facilities:

In Frankfort, Indiana, work will focus on storage improvements and optimization as well as multiple equipment upgrades. Work is expected to be completed in late 2028.
In Deerfield, Missouri, investments will focus on unlocking capacity within conveying, flaking, extraction and utility systems. Work is expected to be completed in late 2028 or early 2029.
The company’s crush plant in Lincoln, Nebraska, will receive meal-storage enhancements as well as debottlenecking improvements designed to eliminate current restraints. Work is expected to be completed in late 2028.
The Spiritwood, North Dakota, facility operated through the Green Bison joint venture with Marathon Petroleum Corp. will benefit from operational optimization and select equipment improvements. Work is expected to be completed in mid-2028.

These investments are designed to unlock approximately 700,000 metric tons of additional annual crush capacity across the four facilities, equating to more than 25 million bushels of new demand for American farmers.

In addition, the company is actively evaluating several other North America crush locations for similar future investments.

These projects follow on other recent investments to enhance ADM’s U.S. footprint, including upgrades at its Clinton, Iowa, corn facility and capacity expansions at its elevator in Optima, Oklahoma. READ MORE

Excerpt from American Soybean Association/Biobased Diesel Daily: Soybean farmers and market watchers alike were salivating for USDA’s first look at farmer-surveyed yields ahead of the August 2026 Crop Production and World Agricultural Supply and Demand Estimates report published Aug. 12.

Yield turned out to be a smaller-than-anticipated factor in early forecasts of the 2026 U.S. soybean crop, according to USDA’s data.

Rather, a larger-than-expected increase in acreage pushed projections for the 2026 soybean harvest to a new record high.

Soybean futures prices were hardly deterred by the behemoth supply outlook, gathering strength from corn’s price gains, increased soy-crush volumes and continued export purchases by China.

Prices rise on robust demand forecasts

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A big crop grows bigger

Markets had been expecting USDA to report a yield estimate closely mirroring USDA’s trendline forecast of 53 bushels per acre (bpa).

The prereport analyst estimates ranged between 52 and 53 bpa with an average guess of 52.9 bpa.

Farmer reports led USDA to peg the August soybean-yield forecast at 52.7 bpa, slightly below market expectations, and the second-largest U.S. soybean yield on record, if realized.

Perhaps it is too early to put too much stock in the August soybean yield.

When USDA conducted the August 2026 yield survey during late July through the first week of August, most soybean crops around the country were just undergoing peak pod-fill activity.

Soybean yields reported by farmers at this point are more likely to be wild guesses than observations.

Historically, October and November yield estimates for soybeans tend to have a smaller variance to final yields reported in January, so the soybean market may have to wait a little longer for yield certainty.

One item in USDA’s August Crop Production report that provided more certainty was acres. READ MORE

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women U.S. Trade Representative (USTR) Transportation Fuels Policy Trade Policy tax policy tariffs tallow soybeans soybean prices Russia renewable volume obligation (RVO) Renewable Fuel Standard (RFS and RFS2) Renewable Diesel/Green Diesel/HVO/Paraffinic Diesel Regulations-Federal pre-processing North Dakota Nebraska Missouri markets/sales market forces Investing Indiana import/export heating oil/fuel ethanol/bioethanol EPA (Environmental Protection Agency) E15 corn/maize China Brazil BioRefineries/Renewable Fuel Production biodiesel animal fat 45Z Clean Fuel Production Tax Credit

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