Renewable diesel margins could experience a modest increase this fall, according to CoBank’s latest Quarterly Research Report, released July 11. If realized, that boost to margins could mitigate softening demand for soybean oil in the biofuel market. 

According to CoBank, imports of used cooling oil and tallow have both taken on a growing share of feedstock in the renewable diesel industry. That dynamic has softened some demand for U.S. soybean oil and caused larger operators to delay some proposed renewable diesel plants and expansions. 

Some analysts, however, are predicting that renewable diesel margins could increase to 25 cents per gallon this fall when compared to early June levels, CoBank said. If realized, the increase could likely boost renewable identification number (RIN) prices and incentivize the use of more soybean oil as biofuel feedstock. 

Regarding the overall outlook for soybeans, CoBank cited USDA data showing soybean stocks are up considerably and planted acreage is up more than 3% when compared to last year. 

The U.S. soybean market is struggling with disappointing exports as a strong dollar and record South American harvest has discouraged sales, according to CoBank. While soybean meal exports are at a historic high, CoBank notes that record impots of canola oil, tallow and used cooking oil (UCO) have blunted soybean prices and crush margins that resulted in an unexpected, but temporary, drop in April crush. 

A full copy of the report is available on the CoBank website.