CBOT Soy Oil Decouples: First Signs of the New Biofuel Order

The newly proposed RVOs have created a deep fracture in the global biodiesel market by effectively severing U.S. demand from international feedstock supply. Foreign producers who have long complied with EPA registration and sustainability criteria now find themselves relegated to second-tier status. This abrupt policy shift, which phases out RIN eligibility for non-U.S. origin feedstocks starting in 2026, has left many foreign suppliers stranded—especially those who invested heavily in supply chains aligned with U.S. compliance. While these rules are not yet enforced, the market is already adjusting preemptively, with exporters reassessing feedstock sourcing and forward sales starting as early as Q4 2025.

In Europe, the ARAG barge market reflected steady biodiesel demand even as ICE gasoil dipped modestly below $700/mt today. That decline may seem inconsequential in isolation, but it follows a $100/mt rally since May 1, which has returned gasoil futures to the upper third of their historical trading range. A further escalation in geopolitical tensions could easily drive prices toward the $750–800/mt band, a move that would translate into large structural support for biodiesel and renewable diesel, now integral to the distillate supply chain. FAME (F0) traded at $1,361/mt, RME at $1,421/mt, and UCOME at $1,454/mt. The unusually narrow RME/UCOME spread reflects growing mistrust in the waste-based import supply chain. This follows formal letters from Copa-Cogeca to both the European Commission and the Polish Minister of Agriculture, calling for the suspension of double counting for imported biofuels where traceability is weak or unverifiable. The letters highlight widespread market distortions, collapsing rapeseed prices, and a surge in fraudulent declarations undermining the Union Database and voluntary schemes.

Meanwhile, the SAF market remains structurally misaligned. SAF trades at $1,925/mt while HVO class 2 sits slightly lower at $1,895/mt—an inversion that shouldn't persist given SAF's much higher GHG savings (often >90%) and growing regulatory support. However, airlines have time: the RED III mandate doesn’t demand 6% SAF blending until 2030, and both ETS credits and CORSIA offer flexible compliance routes in the interim. The issuance of 20 million free allowances under ETS will blunt SAF uptake pressure in the short term, while CORSIA’s thresholds remain modest and largely symbolic until 2027. For now, SAF premiums remain supported more by policy optics than offtake urgency.

On the feedstock front, CBOT soybean oil futures have surged from 45 to 55 cents/lb, a move that highlights the ongoing decoupling between U.S. and international markets. Paranaguá FOB soybean oil premiums are now bid at -$650 to -$700/mt, underscoring a growing bifurcation. This 10-cent rally may well be the early signal of an “RVO premium,” as U.S. futures increasingly price in domestic policy dynamics rather than global fundamentals. Export outlooks are already shifting. As Q4 approaches, U.S. soybean oil exports could falter under the weight of domestic compliance-driven demand, while South American suppliers struggle to compete without RIN support.

Finally, D4 RINs have vaulted nearly 10% to $1.278, reinforcing the market’s recalibration. This surge confirms what the futures curve, feedstock spreads, and regulatory trajectory all imply: compliance costs are rising, imports are tightening, and the market is repricing domestic production accordingly. The implications are profound. U.S. policy is no longer just shaping domestic biofuel markets—it’s redrawing the global trade map, one RIN and one basis point at a time.