The American Soybean Association (ASA) is warning that a sharp increase in small refinery exemptions under the U.S. Renewable Fuel Standard could significantly weaken domestic soybean oil demand, with potential implications extending into the canola market.
In a new release Tuesday, ASA said recent reports suggest exemptions for the 2025 RFS compliance year could exceed 1.8 billion Renewable Identification Number credits under a revised methodology now being considered. That would be nearly double the level the U.S. Environmental Protection Agency assumed when it finalized its 2026-27 Renewable Volume Obligation rule.
The ASA said such a large increase in exemptions could wipe out roughly 500 million gallons of biomass-based diesel demand and cost U.S. soybean farmers about US$1 billion in lost revenue.
The issue is important for Canadian canola markets because Chicago soyoil prices are widely regarded as a leading price driver and directional indicator for canola oil and canola futures. Any policy change that reduces expected U.S. demand for soybean oil could pressure Chicago soyoil values and, in turn, weigh on ICE canola futures and Canadian canola oil prices.
The ASA said the potential exemptions would undercut earlier steps by the Trump administration to expand biofuel demand. The final 2026-27 blending rule included historically high biofuel volumes that the farm group had previously praised for supporting domestic soybean demand, encouraging investment, and strengthening local soybean basis levels.
ASA vice-president Dave Walton, an Iowa soybean farmer, said producers can ill afford to lose one of their most important sources of domestic demand just as the biofuel sector begins benefiting from higher mandated volumes.
Biomass-based diesel has become an increasingly important outlet for U.S. soybean oil, supporting soybean prices, rural employment and processing activity. The ASA has urged the White House and President Donald Trump to reject any broader formula for refinery exemptions that would materially increase the amount of biofuel demand removed from the RFS.
