Earlier this year, the US Environmental Protection Agency (EPA) proposed a large mandatory increase in the volumes of biodiesel and renewable diesel to be blended into fossil fuels in 2026 and 2027.
The EPA is looking at shifting blending volumes from the current 3.35bn gallons to 5.61bn gallons in 2026. This represents a 67% increase that could reshape soybean demand.
For 2027, the proposal points to an even greater mix of 5.86 bn gallons, said Luiz Fernando Roque, Market Intelligence Coordinator at Hedgepoint.
The EPA will accept public comments on the proposal until August 8, after which further developments are expected.
“Although the proposal is still in the early stages of the approval process, the market has already begun to speculate about possible impacts on the supply and demand frameworks for the US soybean complex,” according to Hedgepoint analysts.
Such speculation has already led to noticeable movements in futures contracts in Chicago, which Roque believes may continue at least until August, when the EPA concludes the public comment phase.
Futures contracts are agreements to buy or sell commodities at a set price on a future date. In this case, traders are betting on the direction of soybean prices in anticipation of the EPA ruling, even before any official changes take effect.
This is expected to have far-reaching consequences for global soybean supply and pricing, impacting Asian countries that are heavily reliant on soy imports for food processing.
Impact on Asia
For Asian markets, where countries such as China, Japan, South Korea and Southeast Asian nations depend heavily on imported soybeans and soy-derived ingredients, the proposed mandate could add upward pressure on prices.
This is particularly concerning for feed manufacturers and food processors that rely on soybean meal and oil as core inputs.
While some Asian countries grow soybeans domestically, many – including China and Japan – still rely heavily on imports to meet food and processing needs.”
Hedgepoint estimates that even if just half of the planned expansion in US soybean crushing projects materialises, the domestic use of soybeans in the US would increase significantly, reducing the exportable surplus – potentially leaving less available for export markets, including those in Asia.
This comes at a time when Asian feed and food manufacturers are already contending with fluctuating commodity prices, with price volatility driven by geopolitical tensions, including the US–China trade war and conflicts in the Middle East.
Asia’s reliance on soybean imports – especially from the US – makes the region particularly sensitive to such global market shifts.
Soybean crushing capacity
One potential solution would be to increase US soybean crushing capacity - to this end, there are already projects underway including expansions in existing plants and constructing new plants in the states of South Dakota, Kansas, Illinois, Ohio and Louisiana.
How soybean crushing drives food and fuel
Soybean crushing is the process of separating soybeans into two key products:
- Soybean oil widely used in cooking oils, margarine, snacks, baked goods, and processed foods
- Soybean meal a by-product mainly used in animal feed
This process plays a central role in both the food and biofuel industries.
For food manufacturers, soybean oil is a staple ingredient in many packaged and prepared products across Asia.
For the biofuel sector, soybean oil is a key feedstock for biodiesel and renewable diesel production.
According to data from the American Soybean Association, current US crushing capacity stands at 69.4 million tonnes per year.
This capacity could increase by 5.1 million tonnes – rising from 69.4 to 74.5 million tonnes by 2026 – if all planned projects are completed.
Roque notes that even without these expansions, there is still room to increase throughput using existing infrastructure.
“We’d like to point out that, although current capacity stands at 69.4 million tons, the USDA’s June estimate points to 67.8 million tons of soybeans being crushed in the US 2025/26 season, representing 97.7% use of capacity. As such, there is also room for an increase in crushing using the capacity already available,” says Roque.
While the final outcome remains uncertain, the signal to the market is clear: biofuel policy in the US is emerging as a key driver of agricultural commodity trends, with global ramifications.
If implemented, this would mark the largest ever increase in the US blending mandate and usher in a “new era in the use of alternative fuels in the US market,” according to the market analysts.
For Asian businesses, closely monitoring the progress of this regulation will be crucial, especially for stakeholders with exposure to soy-dependent supply chains.
Businesses may also need to consider risk mitigation strategies such as diversified sourcing or hedging – where firms, for example, lock in future prices through contracts to protect against sudden price spikes or drops caused by supply disruptions.
