EPA and CARB Announcements and the Balancing Act Between Soybeans, Soybean Oil, and Meal

How biofuel policy communications affect the soybean complex in the U.S.? Using an event study approach and causal inference methods, we analyze 36 policy events between 2021 and 2025, including Environmental Protection Agency (EPA) announcements, California Air Resources Board (CARB) reports, and news “leaks” from media sources with early information access. We find that soybean oil futures return increase significantly on announcement days (0.59%) and continue rising the following day (0.62%), exhibiting what we term Post-Announcement-Leak Drift (PALD). The informational value of these biofuel policy signals rivals that of major USDA WASDE reports. Our causal analysis reveals that a 1% biofuel-induced price increase in soybean oil leads to a 0.19% rise in soybean prices and a 0.30% drop in soybean meal prices. These findings contribute to the food-versus-fuel debate by demonstrating that while biofuel mandates increase soybean oil prices, they simultaneously decrease soybean meal prices, partially offsetting inflationary concerns. Soybean farmers benefit most from expanded biofuel mandates, followed by livestock producers who face lower feed costs, while crushers see more modest benefits as approximately 50% of the gains from higher oil prices are offset by lower meal prices. Our results highlight the growing importance of biofuel policy signals in agricultural commodity markets and reveal the complex price dynamics within the soybean complex in response to biofuel demand shocks.