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The US biofuel feedstock market has been operating in a state of structured uncertainty for the better part of 18 months. Producers have known the policy direction – the 45Z Clean Fuel Production Credit, the expanded Renewable Volume Obligations, the North American sourcing rules – but have not been able to fully calculate their credit values because the underlying model that determines them has not been finalized.
That is about to change. US Agriculture Secretary Brooke Rollins confirmed at a House Committee on Agriculture hearing on June 10 that the USDA expects to publish its technical feedstock guidelines for 45Z this summer. When it does, it will complete the calculation chain that every biofuel producer, feedstock trader and procurement team has been waiting on — and it will reprice the feedstock hierarchy in ways that are already becoming visible in physical markets.
The 45Z credit is not a fixed subsidy. Its value is determined by the lifecycle carbon intensity of the feedstock used in production. To calculate it, producers must use the Department of Energy’s GREET model, which converts feedstock characteristics and production pathways into numerical emissions values that Treasury and the IRS then use to determine the credit per gallon.
The missing link is the USDA Feedstock Carbon Intensity Calculator – the FD-CIC – which quantifies the emissions reductions available from climate-smart agricultural practices such as no-till, cover crops and nutrient management. Until that model is finalized, producers relying on those practices cannot fully determine their credit values. As of today, producers are already halfway through the 2026 tax year without a settled number.
The summer publication will not resolve every open question – the proposed 45Z regulations from Treasury are still working through the public comment process following hearings in late May. But the USDA guidelines will remove the single most significant source of remaining uncertainty for feedstock-specific credit calculations.
While the FD-CIC finalization is still ahead, one critical policy change has already landed and is reshaping the feedstock mix in real time.
The One Big Beautiful Bill Act, signed into law in July 2025, removed indirect land use change from the emissions scoring calculation. That single change transformed soybean oil’s position in the 45Z framework. Under the original IRA guidance, soybean oil’s ILUC penalty pushed its carbon intensity score above the threshold that would have limited its credit value relative to lower-carbon feedstocks. With ILUC removed, US soybean oil now carries a carbon intensity score of 27, with a corresponding 45Z credit of 49 cents per gallon – qualifying for nearly the same level of support as tallow and UCO.
The market has already responded. Soybean oil use for US biofuels production is projected at 14.55 billion lb in 2025/26, climbing by more than 22% to an estimated 17.8 billion lb in 2026/27, according to USDA’s June 2026 WASDE. The USDA attributed that growth directly to finalized RVOs and increased feedstock consumption from the biofuel sector.
The combined effect of 45Z policy and tariffs is restructuring which feedstocks flow where and from where.
Soybean oil’s share of total US biofuel feedstock inputs fell roughly 16 percentage points between 2021 and 2025 as cheaper imported alternatives displaced it. Fastmarkets projects that share to recover from a 2025 trough of 33% to 41% by 2027, driven primarily by ILUC removal. The policy has, in effect, rebuilt the commercial case for domestic soybean oil that was eroded during the import surge years.
Imported UCO from China – the feedstock that drove much of that displacement – has been largely disqualified from 45Z credit eligibility under the North American sourcing rule. Chinese UCO, once a dominant import stream, no longer qualifies. The volumes have not disappeared but the economics have changed fundamentally.
Not every imported feedstock is in retreat. Australian tallow flows to the US reached 50,400 tonnes in January and February 2026 alone, up 77% year on year, as Australia’s geographic and policy position makes it one of the few origins that can still compete effectively in the US market. US imports of inedible tallow hit 90,027 tonnes in April 2026 – nearly double the March figure – with Australia the leading supplier at 41,447 tonnes, ahead of Brazil at 22,632 tonnes.
But tallow supply is structurally constrained in a way that soybean oil is not. As one market participant told Fastmarkets: “We’re not going to raise more cows for tallow and we’re not going to fry more food to get more UCO.” Rendered fats and waste oils are finite co-product streams. Collection efficiency and rendering yields can still improve, but overall supply growth for fats, oils and greases remains limited.
Tallow is projected to reach 27.5% of the total US biofuel feedstock mix by 2027. UCO moderates from its 2024 peak. Canola plateaus.
With imported alternatives either disqualified or structurally limited, the question of whether the US biofuel sector can meet its RVO obligations increasingly comes down to one variable: whether domestic soybean crush capacity can expand quickly enough to supply the soybean oil the market needs.
The 2026-27 RVOs finalized by EPA in March 2026 require an approximate 60% increase in biodiesel and renewable diesel production compared to 2025 levels – the highest renewable volume obligations in the history of the programme. Crushing capacity is rising, but the Fastmarkets Jacobsen Renewable Fuels and Feedstocks Long-Term Forecast is clear: capacity still lags projected demand, keeping the system tight and supporting imports where netbacks allow.
This is the central tension in the market heading into the second half of 2026. Policy has created the demand. The domestic supply infrastructure is building toward it. But the gap between current capacity and required output means the market will remain tight – and prices will reflect that – until the crush expansion catches up.
The USDA FD-CIC publication – expected this summer – is the immediate trigger. When it lands, producers will be able to quantify the value of climate-smart agricultural practices in their 45Z calculations for the first time. Feedstocks sourced from farms using qualifying practices will carry lower carbon intensity scores, and therefore higher credit values. That will reshape procurement decisions for soybean meal and, by extension, the soybean crush economics that underpin the whole domestic supply argument.
The final 45Z regulations from Treasury are the second marker. The proposed regulations published in February addressed the main open questions on credit eligibility, emissions rates and certification requirements. Finalization will remove the last layer of regulatory uncertainty that has been keeping some producers and investors on the sidelines.
And from 2028, the 50% import-related RIN reduction – currently deferred – will come back into view. If it lands as written, it further disadvantages foreign feedstocks and tightens the supply calculus all over again.
The feedstock market is not waiting for these events. Prices, trade flows and procurement strategies are already adjusting to where policy is heading. But for anyone making capital allocation decisions, long-term supply agreements or feedstock sourcing strategies, the summer of 2026 is when the picture finally becomes clear enough to plan around.
Fastmarkets tracks daily physical prices for soybean oil, tallow, UCO, distillers corn oil and all major US biofuel feedstocks, alongside forward curves, forecasts and analyst commentary. Explore Fastmarkets Agriculture or get access to live prices.