Canada Markets
Soybean Oil Used for Biofuel Production Expected to Soar
2/19/2026 | 10:47 AM CST
By Mitch Miller, DTN Contributing Canadian Grains Analyst
Keep in mind the bullish information I am about to highlight may well have been responsible for the significant rally in soybean oil (and canola to a lesser extent) that has occurred since the start of the year. Soybean oil has increased 10.29 cents/pound or 21.5% since it opened on Jan. 2. Meanwhile, canola rallied almost $80/mt over that period, adding 13% to its value. I really dislike the phrase "buy the rumor, sell the fact" but keep in mind a well-deserved correction could be seen soon before solid fundamental support inspires additional buying.
Back to the Ag Outlook Forum. The most important assumption presented at the conference was soybean oil used in biofuel production is expected to jump to 17.3 billion pounds in 2026-27 from 14.8 billion in 2025-26 and a whopping 47% above the 11.758 billion pounds used in 2024-25, assuming the blending mandates are increased as expected. As you can see in the accompanying chart (in green), that represents a huge increase over just a few years as the U.S. works toward weaning itself off soybean export market dependance -- and rightfully so.
To accommodate the escalation in use, USDA expects soybean crush will have to increase to 2.655 billion bushels (bb), 70 million bushels (mb) more than the previous record crush expected for 2025-26 and using 60% of the projected record soybean crop (of 4.450 bb). As a side note, the increased soybean crop is due to estimates calling for 85 million acres to be seeded with a yield matching the 2025-26 record of 53 bushels per acre (bpa). To put the crush demand in perspective, as recently as 2024-25, soybean crush only used 51.5% of the total production for the year. For 2026-27, the increased crush is expected to increase soybean oil production by 1.39 billion pounds compared to 2025-26, taking it up to 31.330 billion pounds.
One area that will need to be monitored closely is the assumptions regarding soybean oil exports. Again, by necessity, USDA is expecting exports to fall to 600 million pounds in 2026-27 from the current estimate for 2025-26 of 1.2 billion pounds. That is already going to be sharply below the 2.492 billion pounds exported in 2024-25, assuming the market does its job and prices soybean oil out of the export market for much of the remainder of the old-crop year and 2026-27 as expected. So far, the rally in 2026 suggests prices are doing what they need to on that front.
Interestingly enough, even with the increase in production and decrease in exports, USDA is expecting imports of soybean oil will increase 135 million pounds from 2025-26 levels, reaching 500 million pounds. That suggests canola oil imports should be welcome as well.
And last, but not least, soybean oil ending stocks are expected to fall with the average price expected to rise in 2026-27. Ending stocks are projected to be 1.582 billion pounds, down from 1.752 billion pounds in 2025-26 at relatively minimum pipeline levels. And with all the changes, the average annual price is projected to increase to 58 cents/pound, up from 53 cents/pound in 2025-26 and 47.6 cents/pound in 2024-25.
Based on the outlook, soybean oil and canola should be well supported fundamentally on future profit-taking corrections.
Looking briefly at the technicals, the weekly and monthly continuation charts show an impressive rally off long-term support just under 50 cents/pound, currently reaching levels not seen since September 2023. The next significant resistance is not seen until just over 65 cents/pound, although there could be minor resistance at previous support just under 60 cents/pound.
Regarding the market participants themselves, managed money traders were responsible for much of the rally seen so far in 2026. According to Friday's Commitments of Traders report, they were net buyers of another 23,252 contracts during the week ended Feb. 10. More importantly, in the five weeks up to Feb.10, they were net buyers of just under six billion pounds of soybean oil, going from one of their largest net-short positions to now mildly net-long during the dramatic change of strategy. With everything discussed in this post, they could be expected to add to long positions on pullbacks.
I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.
Mitch Miller can be reached at [email]mitchmiller.dtn@gmail.com[/email]
Follow him on social platform X @mgreymiller
(c) Copyright 2026 DTN, LLC. All rights reserved.
For the chart below...
By far the most important assumptions presented in Thursday's Ag Outlook Forum for canola producers are found in the soybean oil supply and demand updates. In particular, the suggestion that biofuel use will soar to 17.3 billion pounds (in green) in 2026-27 from just 11.758 billion pounds in 2024-25 will set the tone for the year to come. (DTN chart, USDA data)?
Soybean Oil Used for Biofuel Production Expected to Soar
2/19/2026 | 10:47 AM CST
By Mitch Miller, DTN Contributing Canadian Grains Analyst
Keep in mind the bullish information I am about to highlight may well have been responsible for the significant rally in soybean oil (and canola to a lesser extent) that has occurred since the start of the year. Soybean oil has increased 10.29 cents/pound or 21.5% since it opened on Jan. 2. Meanwhile, canola rallied almost $80/mt over that period, adding 13% to its value. I really dislike the phrase "buy the rumor, sell the fact" but keep in mind a well-deserved correction could be seen soon before solid fundamental support inspires additional buying.
Back to the Ag Outlook Forum. The most important assumption presented at the conference was soybean oil used in biofuel production is expected to jump to 17.3 billion pounds in 2026-27 from 14.8 billion in 2025-26 and a whopping 47% above the 11.758 billion pounds used in 2024-25, assuming the blending mandates are increased as expected. As you can see in the accompanying chart (in green), that represents a huge increase over just a few years as the U.S. works toward weaning itself off soybean export market dependance -- and rightfully so.
To accommodate the escalation in use, USDA expects soybean crush will have to increase to 2.655 billion bushels (bb), 70 million bushels (mb) more than the previous record crush expected for 2025-26 and using 60% of the projected record soybean crop (of 4.450 bb). As a side note, the increased soybean crop is due to estimates calling for 85 million acres to be seeded with a yield matching the 2025-26 record of 53 bushels per acre (bpa). To put the crush demand in perspective, as recently as 2024-25, soybean crush only used 51.5% of the total production for the year. For 2026-27, the increased crush is expected to increase soybean oil production by 1.39 billion pounds compared to 2025-26, taking it up to 31.330 billion pounds.
One area that will need to be monitored closely is the assumptions regarding soybean oil exports. Again, by necessity, USDA is expecting exports to fall to 600 million pounds in 2026-27 from the current estimate for 2025-26 of 1.2 billion pounds. That is already going to be sharply below the 2.492 billion pounds exported in 2024-25, assuming the market does its job and prices soybean oil out of the export market for much of the remainder of the old-crop year and 2026-27 as expected. So far, the rally in 2026 suggests prices are doing what they need to on that front.
Interestingly enough, even with the increase in production and decrease in exports, USDA is expecting imports of soybean oil will increase 135 million pounds from 2025-26 levels, reaching 500 million pounds. That suggests canola oil imports should be welcome as well.
And last, but not least, soybean oil ending stocks are expected to fall with the average price expected to rise in 2026-27. Ending stocks are projected to be 1.582 billion pounds, down from 1.752 billion pounds in 2025-26 at relatively minimum pipeline levels. And with all the changes, the average annual price is projected to increase to 58 cents/pound, up from 53 cents/pound in 2025-26 and 47.6 cents/pound in 2024-25.
Based on the outlook, soybean oil and canola should be well supported fundamentally on future profit-taking corrections.
Looking briefly at the technicals, the weekly and monthly continuation charts show an impressive rally off long-term support just under 50 cents/pound, currently reaching levels not seen since September 2023. The next significant resistance is not seen until just over 65 cents/pound, although there could be minor resistance at previous support just under 60 cents/pound.
Regarding the market participants themselves, managed money traders were responsible for much of the rally seen so far in 2026. According to Friday's Commitments of Traders report, they were net buyers of another 23,252 contracts during the week ended Feb. 10. More importantly, in the five weeks up to Feb.10, they were net buyers of just under six billion pounds of soybean oil, going from one of their largest net-short positions to now mildly net-long during the dramatic change of strategy. With everything discussed in this post, they could be expected to add to long positions on pullbacks.
I welcome feedback along with any suggestions for future blogs. My daily comments can be found in Plains, Prairies Opening Comments and Plains, Prairies Quick Takes on DTN products.
Mitch Miller can be reached at [email]mitchmiller.dtn@gmail.com[/email]
Follow him on social platform X @mgreymiller
(c) Copyright 2026 DTN, LLC. All rights reserved.
For the chart below...
By far the most important assumptions presented in Thursday's Ag Outlook Forum for canola producers are found in the soybean oil supply and demand updates. In particular, the suggestion that biofuel use will soar to 17.3 billion pounds (in green) in 2026-27 from just 11.758 billion pounds in 2024-25 will set the tone for the year to come. (DTN chart, USDA data)?