CBOT soybean oil prices found support this week following the publication of 45Z guidance by the U.S. Department of the Treasury, which reduced policy uncertainty and tilted eligibility toward North American crop oils.
CBOT soybean oil increased to 54.49 U.S. cents per pound from 54.41 cents per pound the previous week as the market responded to improved clarity around biofuel incentives.
According to the proposal, fuels produced after December 31, 2025 must be derived exclusively from feedstocks produced or grown in the United States, Canada, and Mexico, with no foreign feedstocks allowed.
ILUC penalty removal narrows gap for crop oils
The guidance removed the Indirect Land Use Change penalty from carbon intensity adjustments—a significant development for crop oils that were structurally disadvantaged versus waste fats under lifecycle carbon intensity scoring.
This change will not automatically make soybean oil the cheapest carbon intensity option, but it narrows the gap between crop oils and waste fats in the biofuel feedstock market.
The policy support arrives after last week’s news that India cancelled 50,000 metric tons of soybean oil from Latin America planned for first and second quarter delivery due to price uncompetitiveness.
Market awaits additional policy details
The market is still waiting for critical details related to biodiesel policies, including the finalization of Renewable Volume Obligations and updates on the possible reallocation of exempted volumes in the United States.
These remaining policy elements will be key for the final price response, as market participants assess the full impact of the 45Z guidance on feedstock demand and pricing dynamics.
Soybean oil outlook points to upside price risk
Machine learning models show a bearish outlook for CBOT soybean oil until August, followed by an upward trend. Technical analysis indicates bearish conditions in the short term based on MACD, while remaining bullish in the longer term as prices stay above key moving averages.
The first quarter could be bullish as the market anticipates the finalization of U.S. biofuel policies. Prices could remain firm through the second and third quarters, as key agencies forecast a decline in soybean oil export availability in 2025/26 ranging from 5% to 11%.
U.S. harvest pressure is possible in September and October, but this may be offset by strong demand and slower supply growth. Additional support may come from potentially higher palm oil prices in November and December.
The analysis concludes there is upside price risk in 2026 due to potentially lower soybean oil availability for exports, with the 45Z guidance providing structural support for North American crop oil demand in the biofuel sector.
Palm oil prices decline on crude oil weakness
BMD crude palm oil benchmark ended lower week-over-week at $1,055 per metric ton, despite a rebound on the final trading day. The lower price is attributed to a decline in Brent crude oil prices, which fell to $66.6 per barrel from this year’s peak of $69.59 per barrel amid U.S.-Iran de-escalation and peace talks between Russia and Ukraine.
Bullish supply and demand estimates provided a floor to prices. Reuters and Bloomberg estimate January Malaysian stocks to be down 4.6% and 5.2% respectively, as production is expected to decrease by 11.5-12% and exports to increase by 7.6%.
India’s palm oil imports reportedly jumped 51% month-over-month in January to 766,000 metric tons, a four-month high, as palm oil traded at a discount exceeding $100 per metric ton to soybean oil.
This newsarticle is part of a more comprehensive market analysis on the oils and fats market. For the full analysis, visit: https://app.vespertool.com/market-analysis/2664.
