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1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteBiofuel demand is changing the balance between soybean oil and palm oil, but it does not determine their prices on its own. U.S. and Brazilian biofuel production draws largely on soybean oil, while Indonesian biodiesel relies primarily on palm oil. Because the oils can substitute for one another in some uses, shifting fuel demand can widen or narrow their price gap—alongside harvests, export policies, and other supply and demand forces.
What does the soybean oil–palm oil price relationship mean?
It is the relative value of two oils that compete in some food and industrial uses. When soybean oil rises faster than palm oil, soybean oil trades at a larger premium; when palm oil rises faster, that premium narrows or may reverse.
The University of Illinois farmdoc Daily analysis compares nearby futures from January 2020 through November 2025. A futures comparison is not the same as comparing physical oil delivered to a particular buyer: contract, location, currency, unit, and date all matter. The analysis describes wider and more prolonged divergences in recent years than in earlier periods, but it does not estimate how much of any move was caused by biofuel demand.
How can biofuel demand affect the price gap?
When a biofuel incentive or mandate makes an oil more valuable as a fuel input, producers may use more of it for fuel and less may remain available for other users. That can support its price relative to oils that can replace it in some applications. The effect depends on how much the added fuel demand changes total use and on whether competing feedstocks are available.
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Different regions pull on different oils
The International Energy Agency identifies soybean oil as a key feedstock for Brazilian producers and palm oil as the primary feedstock for Indonesian biofuel manufacturers. In the United States, soybean oil has also been important to biodiesel and renewable diesel. The IEA identifies the United States, Europe, Brazil, and Indonesia as major sources of growth in biodiesel, renewable diesel, and biojet consumption.
Substitution can spread the effect
The U.S. Environmental Protection Agency’s analysis of the Renewable Fuel Standard documents increased soybean-oil use for biodiesel alongside increased domestic crushing and lower exports. It also notes that non-biofuel users may turn to palm oil and other vegetable oils. That substitution can transmit pressure from one market to another, rather than leaving the effect confined to the oil used directly for fuel.
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What do past price divergences show?
| Period | Observed price move | Context described by farmdoc Daily |
|---|---|---|
| 2021 | At the divergence peak, soybean oil was 68% above palm oil in the analysis’s nearby-futures comparison. | Rapid U.S. renewable-diesel growth may have helped lift soybean-oil prices; tight global vegetable-oil supplies also contributed. The 68% figure is a historical price comparison, not a measured biofuel effect. |
| September 2022 | Soybean oil was 113% above palm oil in the analysis’s comparison. | After Indonesia lifted its temporary palm-oil export ban in May 2022, palm oil fell more quickly. The ban reversal and the relative price move show how trade policy and supply can alter the gap independently of fuel demand. |
| Late 2022 | The analysis describes soybean-oil weakness. | It links the weakness to proposed U.S. biofuel mandates that were lower than expected; this is part of a multi-factor account, not proof that mandates alone caused the decline. |
What is changing in biofuel policy and demand in 2026?
United States: incentives and production outlook
The U.S. Energy Information Administration reported in June 2026 that rising Renewable Identification Number (RIN) values relative to the Bean-Oil Heating-Oil (BOHO) spread improved biodiesel and renewable-diesel margins. EIA describes BOHO as a measure of blending profitability without incentives: “The difference between soybean oil and heating oil prices, the Bean Oil-Heating Oil (BOHO) spread, reflects the profitability of blending biodiesel and renewable diesel without incentives.”
In its 2026 outlook, EIA forecast U.S. renewable-diesel production to rise 24% and biodiesel production to rise 41% compared with 2025. Those are forecasts, not confirmed production results. EIA also cited higher fuel prices and increasing plant capacity in its outlook.
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Indonesia: a stronger stated palm-oil pull
USDA’s Indonesia Biofuels Annual reports that Indonesia moved from a B40 to a B50 biodiesel mandate in July 2026. Indonesia’s Ministry of Energy and Mineral Resources announced a 2026 biodiesel allocation of 15.65 million kilolitres in 2025. These policy signals point to greater intended palm-oil use, but actual demand depends on supply, funding, implementation, and fuel economics.
Global feedstock competition
In Renewables 2025, the IEA projected biofuel feedstock demand near 825 million tonnes per year in 2030. It forecast vegetable-oil demand for biofuels to expand by nearly 20 million tonnes per year by 2030 relative to 2024, with biofuels’ share of global vegetable-oil production rising from just under 21% in 2024 to 27% in 2030. The outlook also includes growth in waste and residue oils, so vegetable oils are not the only feedstocks in play.
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What should readers watch when comparing the oils?
- Policy pull: Track mandate volumes, credit values, eligibility rules, and implementation dates in major producing and consuming markets. A stated mandate is not the same as realized feedstock demand.
- Feedstock exposure: Check whether changing demand is aimed mainly at soybean oil, palm oil, or another oil or fat, and whether other users can switch feedstocks.
- Supply and logistics: Follow harvest and weather prospects, stocks, export restrictions, and port flows. A production shock or policy change can outweigh or reverse the effect of biofuel demand.
- Price basis: Confirm whether a comparison uses futures or physical prices, and note the contract, delivery location, currency, unit, and date. Different bases can tell different stories.
- Evidence for causation: A price move that occurs alongside a policy change does not establish that the policy caused it. Look for evidence about actual production, consumption, and trade as well as prices.
What the price relationship can—and cannot—tell you
The farmdoc Daily price series ends in November 2025, so it does not establish the full soybean-oil/palm-oil price relationship in 2026. The 2026 EIA and Indonesian policy information updates the demand outlook, not that daily price series. Taken together, the sources support biofuel demand as an important force reshaping relative values, but they do not isolate its contribution to the historical divergences or provide a stand-alone forecast of which oil will outperform.
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