Summer Grades, Sinking Soy: What US April Feedstock Use Tells Us

The latest EIA data for April 2025 offers the first glimpse into U.S. summer-grade biodiesel and renewable diesel production. Total feedstock use dropped sharply year-over-year by 15.23%, with soybean oil consumption down a remarkable 29.07% and canola oil use also seeing a double-digit decline. In contrast, tallow surged 36.8%, and corn oil edged up 13.74%, continuing its steady climb as a favored low-CI feedstock. This sharp rotation in feedstock preferences reflects both the absence of final 45Z guidance and market preference for cheaper, more carbon-efficient alternatives.

Feedstock use for Biodiesel/RD

In Washington, the much-anticipated “votarama” over the Senate’s budget and energy package has taken a twist. Several proposed amendments—including one from Senator Ernst aimed at preserving wind and solar tax credits and repealing the excise tax—will not be put up for a vote. This is critical for the biofuels sector, as any hope of softening 45Z restrictions or protecting SAF incentives is fading fast. Traders hoping for policy clarity on foreign feedstock eligibility may be left disappointed, and the market is beginning to price in a stricter, U.S.-feedstock-dominated landscape for 2026 onward. D4 RINs remain unchanged at 1.15, underscoring the policy stalemate.

In Europe, physical barge premiums in the ARA region remain firm despite softer gasoil, with UCOME continuing to lead at +801 over ICE gasoil, translating to a flat price of $1,476/mt. This reflects solid demand, particularly as summer-grade blends come into focus. Gross margins remain attractive—UCO at $1,200/mt ex-works still offers a $276/mt margin to EU producers. RME margins narrowed slightly to $176/mt after a drop in rapeseed oil prices, which now trade at a 45 €/mt discount to soybean oil, reinforcing a cost-led incentive to pivot back toward RSO-based biodiesel.

On the futures side, BOGO has settled back to +475 as ICE gasoil gave up some ground, though Jul/Dec backwardation remains strong at +56, mainly driven by a robust Jul/Sep spread of +30. Heating oil crack margins are still elevated near $31/brl, signaling strong distillate demand amid tight inventories. That distillate strength continues to act as an anchor of support for biodiesel values globally, even as macro volatility tempers speculative positioning.

SAF and HVO Class II remain steady near $2,087/mt flat, but demand is subdued amid ample co-processed jet fuel and muted airline appetite. Forward markets show little interest in lifting volumes, and pricing reflects a narrow range with low volatility. Meanwhile, EU regulators and market participants are increasingly focused on the sustainability and verification of UCO and POME streams in light of multiple fraud allegations. This brewing regulatory risk could have real pricing and reputational consequences for traders depending on these feedstocks for compliance.