Uncertainty about demand for renewable diesel and biodiesel is weighing on soybean and canola oil markets, according to USDA economists.
USDA has lowered its estimate for biomass-based diesel production in the 2024-2025 marketing year to 13.25 billion pounds due to reduced biofuel demand, but biofuel production should pick up later to fill renewable volume obligations for 2025.
“In addition, the tariffs especially with China, are expected to impact the imports of used cooking oil, which incentivizes the use of domestically produced feedstocks,” Economic Research Service economists say in their monthly oil crop outlook.
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Canola oil usage for biomass-based diesel fell to 192.6 million pounds in January from 331.5 million pounds in December. Canola oil imports also are down. Domestic canola crush also has dropped substantially.
A coalition of biofuel and oil industry groups has appealed to the Trump administration to raise the RVO for biomass-based diesel to 5.25 billion gallons for 2026. The target for 2025 is 3.35 billion gallons.
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