China has still not bought one bushel of new crop soybean exports from the U.S. and they may not with U.S. product facing up to a 23% tariff.
Last year at this time China had bought 250 million bu. of U.S. soybeans but this year is buying from South America and without a China deal the U.S. could miss its prime export window which will further pressure soybean prices.
Can BioFuels Make Up for Lost China Export Business?
Due to the expected increase in demand for biofuels like renewable diesel and SAF the soybean processing industry was planning a 30% increase in crush capacity with the use of soybean oil as a feedstock.
With recent biofuels policy wins that finally looks more promising but experts says the biofuels ramp up won’t come soon enough to make up for lost exports to China.
Trifecta of Biofuels Policy Wins
The U.S. biofuels industry has had a trifecta of policy wins the last few months including EPA’s higher than expected proposed blending mandates for biomass based diesel according to Dr. Scott Irwin, Agricultural Economist, University of Illinois.
He says, “It started with the June Renewable Volume Obligations (RVOS’s) which were very healthy and included a what is called a half RIN proposal for imported biofuels or domestically produced biofuels made with imported feed stocks.”
A second positive was, as part of the One Big Beautiful Bill, the industry saw some much needed changes to the 45 tax credit program.
Steve Censky, Chief Executive Officer, American Soybean Association says the bill delivered many of the components they had asked for.
“Number one was to extend it because it was going to be expiring in 2028. And so it’s been extended for a couple of years. And then second thing is that we push to make the 45Z tax credit only available to fuels made with U.S. feed stocks,” he ssays.
Irwin says the third part of the hat trick was EPA’s decision on the backlog of Small Refinery Exemptions.
Irwin says, “We got an SRE refinery exemption u decision uh that stretches back going all the way back to 2016 that uh I believe is quite favorable as well.”
Biofuels Industry Awaiting Guidance on RVOs and 45Z
However, the biofuels industry has been waiting nearly two years for Treasury guidance on 45Z to get certainty for investment.
Irwin says, “We still have to wait to see what that guidance looks like. But the important point is that historically historically when those tax credits are awarded either to the uh blender or the producer they bid most of that into their feed stock prices.”
Censky says they also need finalized RVO levels from EPA, which are expected by October 31.
Censky, “f we can finalize the volumes that have been proposed by the EPA, and they propose to expand biomass-based diesel volumes by 67% from 2025 levels. So really historic announcements about the volumes. That really gives potential here for the biomass-based diesel industry.”
But that demand won’t kick in until January of 2026, so can biofuels make up for the loss of China?
Biofuels Ramp Up Too Late to Offset Lost China Exports
Irwin says, “The big thing of course is no matter how bullish you want to get on biofuels it doesn’t replace China on the soybean export side.”
Censky says that’s because while the U.S. soybean industry diversified its export portfolio since the 2018 trade war with China, it still buys over 25% of the soybean crop annually.
“I mean they import more soybeans than the rest of the world combined and so you can’t make up the loss of the China market by gaining a little bit here or there,” he explains.
And with up to 23% tariffs on U.S. soybeans, Censky says China is out of the new crop export market.
“So you’re talking 200 to 400 million bushels of soybeans that they would have purchased already that would be on the books and right now we have zero and what we’re hearing is that they’ve taken care of their needs for October, they’re taking care of their needs for November.” he says.
And without a deal, China could stay out of the U.S. export arena waiting for Brazil’s new crop soybeans to come to market.
