Crude Oil, 45Z Uncertainty, and Rising U.S. Soybean Oil Prices

This ARPC Brief examines the recent divergence in soybean oil Free on Board (FOB) prices across major export origins, focusing on the growing premium of U.S. Gulf prices relative to those of Brazil and Argentina from early 2025 through March 2026. From January through May 2025, prices across all three origins moved closely together. A first period of divergence emerged between June and September 2025, when U.S. soybean oil prices rose sharply following the EPA’s proposed Renewable Fuel Standard volumes and new incentives favoring domestically sourced biofuel feedstocks. Prices later reconverged toward the end of 2025 as uncertainty surrounding final Renewable Volume Obligations and implementation of the 45Z Clean Fuel Production Credit weighed on the market. A second, more pronounced divergence emerged in late February and early March 2026, when rising crude oil prices and heightened geopolitical tensions in the Middle East strengthened expectations of biofuel demand and lifted U.S. soybean oil prices more sharply than South American values. The findings suggest that future U.S. soybean oil price movements will depend on policy clarity surrounding biofuel incentives, developments in crude oil markets, domestic production and stocks, and the pace of South American harvest, crushing, and export demand.