Biofuels and feedstocks
Overview
Demand for biofuels is increasing significantly, driven by the need to decarbonise road transport as part of the energy transition. Global biofuels output is expected to rise by more than 3mn b/d in the next five years, and such rapid growth means that new challenges and opportunities are constantly emerging. Keeping on top of the ever-changing biofuels landscape requires accurate pricing, insightful analysis and access to the latest data.
The Argus biofuels solution provides in-depth pricing and market analysis across the entire global renewable fuel supply chain, from original feedstock to finished fuel, with prices and key insights into regional biodiesel, ethanol and feedstock markets.
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Brazil soybean oil exports may exceed forecasts
Brazil soybean oil exports may exceed forecasts
Sao Paulo, 16 July (Argus) — Brazil's soybean oil exports may surpass projections made at the beginning of 2026, driven higher by rising international demand, a trend likely to bolster prices and inflate biodiesel production costs. Soybean oil shipments could total 2mn metric tonnes (t) in 2026, according to grain processing companies. That's above the 1.6mn t projection from Brazil's association of vegetable oil industries Abiove at the beginning of the year. Soybean oil dispatches in the first half of the year totaled 1mn t, according to data from trade ministry Mdic. Even with the prospect of higher than expected exports, the supply of soybean oil in Brazil's domestic market is expected to remain sufficient to meet requirements of its biodiesel and food sectors. But increased competition for the product is likely to reduce its availability and drive up prices. Soybean oil's profitability is fueling interest in exports. For vertically integrated companies — those that operate across different stages of the supply chain, from feedstock production to fuel manufacturing — it has been more advantageous to sell the oil on the international market than to use it for biodiesel production. Argus indicators highlight the price disparity. Last week, soybean oil traded, on average, at R5,958 ($1,170)/t at the port of Paranagua, while the average price of biodiesel contracts in the Parana–Santa Catarina region stood at R5,628/t. The same trend took place in Mato Grosso state, where soybean oil averaged R5,725/t, compared with biodiesel contracts of R5,405/t in the state's north and R5,551/t in the south. Soybean crushers are also struggling to negotiate soybean oil prices with biodiesel producers that are not vertically integrated or lack the capacity to fully meet their demand for the input. According to the sector, these plants are pushing for lower prices in their counter offers to purchase soybean oil, given the narrower margins on their bi-monthly biofuel supply contracts. Despite biodiesel plants' resistance to higher soybean oil prices, the sector remains the largest market for crushers. In 2025, approximately 6.7mn t — around 56pc of national soybean oil production — were used for biodiesel production, according to Argus estimates. Exports, meanwhile, totaled 1.3mn t during the same period, accounting for nearly 11pc of production, according to data from Abiove. International demand The increased international demand for Brazilian soybean oil comes amid a rise in the mandatory biodiesel blending in diesel in Indonesia and Malaysia, putting Brazil on the radar of vegetable oil buyers. In Indonesia, the biofuel blend in fossil fuel has increased to 50pc from 40pc, a measure likely to boost domestic palm oil consumption and reduce the product's supply on the international market. The increase in the blending mandate comes as Indonesian palm oil production is expected to begin a downward trend. Among the main challenges are aging trees, an insufficient replanting rate and declining yields. Malaysia, another major palm oil producer, is also considering raising the mandatory biodiesel blend in diesel to 50pc. The country is working toward the goal of gradually increasing the share of biofuel to 30pc by 2030 in land transportation. The mandatory blend now sits at 10pc nationwide, but some regions have already adopted a 20pc blend. By Natalia Dalle Cort Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Ethanol off the table in Brazil-US tariff talks
Ethanol off the table in Brazil-US tariff talks
Sao Paulo, 13 July (Argus) — A lowering of Brazilian tariffs against ethanol is off the table in current US-Brazil trade negotiations, Brazil trade minister Marcio Elias Rosa said ahead of a 15 July deadline for a new set of US Section 301 tariffs against Brazil. Brazil charges a 18pc rate on ethanol imports, regardless of origin. Ethanol market access in Brazil is among concerns that could warrant the return of a 25pc tariff on Brazil goods to be decided by 15 July, the US Trade Representative's office (USTR) has said. The added tariff would bring the total US rate on Brazilian ethanol to 37.5pc, up from the baseline tariff of 2.5pc prior to US president Donald Trump's Liberation Day. US industry groups in last week's hearing urged USTR to go beyond just applying a 25pc tariff, arguing the government should also remove barriers for crediting US ethanol imports under the Renovabio program. But Brazilian president Luiz Inacio Lula da Silva Rosa does not want ethanol to be in the agenda this time around, nor does he want it to be discussed without sugar tariffs being addressed too, Rosa said. "It is unfortunate that some want a parity regime so that US ethanol can enter [Brazil] with ease," he told reporters. "Opening the market to US ethanol would put ethanol production in Brazil's northeast at risk in particular. We need to take a very careful approach to this industry, which has already been struggling with declining prices." Brazil exported around 50 b/d of ethanol to the US in January-May, according to US Department of Agriculture data. The US exported 11,420 b/d of ethanol to Brazil over the same period. The minister added that Brazilian sugar faces additional tariffs of up to almost 100pc in the US, adding that it is impossible to separate the discussions because they are all linked to the same production chain. The US barriers against Brazilian sugar were also mentioned by Brazil regional sugarcane and bioenergy association Unica as an "asymmetry in bilateral trade". Unica — one of the groups present in the USTR hearings last week — also said the current 18pc ethanol tariff is compatible with World Trade Organization rules, applied on a non-discriminatory basis to all countries that do not have a preferential agreement with Mercosur, the trade bloc of Brazil, Argentina, Uruguay and Paraguay. There is no bilateral agreement requiring Brazil to grant preferential tariff treatment to US ethanol, it argued. The decline in US ethanol exports to Brazil is primarily the result of structural market changes, namely the expansion of corn-based ethanol production in the country filling seasonal gaps, rather than tariff policy, Unica added. "Discussing tariffs among the two largest producers in the world doesn't seem like the best scenario," Andrea Verissimo, Brazilian corn ethanol association Unem's director of international affairs and communications, said in the 6 July USTR hearing. By Maria Lígia Barros and Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Court challenge hangs over CARB market updates
Court challenge hangs over CARB market updates
Houston, 13 July (Argus) — California regulators want to implement new cap-and-invest rules on 1 September, but a lawsuit by an environmental justice group may complicate the rollout. The group Communities for a Better Environment (CBE) filed a lawsuit on 1 July that alleges that the California Air Resources Board (CARB) violated the California Environmental Quality Act (CEQA) by adopting the carbon market amendments based on an inadequate environmental impact assessment, particularly regarding a proposed industrial decarbonization incentive. The timeline for a legal resolution is uncertain. CBE filed a similar lawsuit in 2024 against the agency's Low Carbon Fuel Standard amendments that is still moving through the courts. Tick tock The wild card in the short term is how fast the courts would decide on CBE's request to stop CARB from implementing its regulations while the case moves forward, said Matthew Dobbins, a partner at law firm Vinson & Elkins and a member of its environment and natural resources team in Houston. "I don't know that the environmental group here would necessarily be able to show imminent and irreparable harm per se to get an injunction," Dobbins said. A pause in CARB's ability to implement the program changes would have ripple effects inside and outside California. Industrial participants covered by the program would get 137mn metric tonnes (t) of free carbon allowances over 2027-30 under the new regulations, but only 106mn t under the current regulations if an injunction is granted. Recipients include refiners, chemical manufacturers, cement producers and hydrogen makers. Additionally, a delay would prevent the introduction of a free allowance allocation benchmark for biofuel production in the state. It also would stall the development of CARB's new manufacturing decarbonization incentive. While the near-term effect on allowance supply would be limited, it could slow efforts to encourage carbon capture and storage projects tied to California's 2045 net-zero goal. The Western Climate Initiative, a joint carbon market between California and Quebec, is aiming for Washington state to join as soon as next year . But Washington needs California to complete its rulemaking, so it can adopt its own changes to ensure compatible programs. "At least in terms of the trial court we can get a sense fairly quickly which way the judge is going to lean," said Daniel Farber, the faculty director at the University of California, Berkeley Center for Law, Energy & the Environment. Splitting hairs The longer the case goes on without an injunction, the more immaterial CBE's arguments may become. "They sort of risk being in a situation where the lawsuit becomes increasingly irrelevant," Farber said, adding that a lengthy legal process could give CARB time to address any deficiencies while moving ahead with the program. This is not the first time California's cap-and-invest program has been drawn into a CEQA case. A San Francisco Superior Court judge in March 2011 directed CARB to halt implementation of the program until the agency addressed CEQA-related deficiencies with its climate change scoping plan. CARB appealed that ruling, which a state court of appeal overturned in 2012. But it is rare that a CEQA case brought before the court has no merit, according to Nico van Aelstyn, a partner in law firm Sheppard's real estate, energy, land-use and environmental practice. CBE could make a "fair argument" that by delivering the final environmental impact assessment (EIA) to board members on 26 May, there was insufficient time for consideration ahead of the vote days later, van Aelstyn said. But that does not mean CBE would ultimately prevail. Courts have historically given CARB deference on technical emissions matters. If a court requires CARB to redo its assessment, it could be at least six months before the agency is in a position to adopt new changes on a "better" final EIA, van Aelstyn said. CARB must first respond to CBE's petition before the judge can rule on a request to block implementation. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
German HVO demand held back by low Rhine water levels
German HVO demand held back by low Rhine water levels
London, 13 July (Argus) — Low water levels on the Rhine have recently weighed on northwest European hydrotreated vegetable oil (HVO) prices by curbing demand from German buyers, but market participants expect the weakness to be temporary as stronger mandate-driven consumption and tighter global supply fundamentals are likely to support prices later this year. The Argus used cooking oil (UCO)-based HVO Class II and palm oil mill effluent (Pome)-based HVO Class IV outright prices have averaged around $2,765/t and $2,990/t during June and July so far, down from around $2,945/t and $3,290/t during April and May. The decline has been driven largely by weaker demand from Germany, one of Europe's largest biofuel consumers. The water level at Kaub — a critical chokepoint on the Rhine — is forecast to fall to 50cm today, the lowest since August 2022. The resulting logistical disruptions have encouraged some German buyers to meet their greenhouse gas (GHG) reduction obligations through buying GHG quota compliance from other companies, rather than buying physical HVO. Companies generate the compliance by placing eligible renewable fuels that deliver greenhouse gas reductions compared with fossil fuels on the market. In Germany, when converted to the same unit as the GHG quota compliance certificates, HVO classes II and IV ended the week at €343.97/t CO2e and €451.90/t CO2e, according to Argus calculations ( see chart ). The 2026 Advanced and Other GHG quota were at €372.50/t CO2e and €480/t CO2e because of strong buying from obligated companies. Comparing in the same unit, called the cost per ticket (CPT), shows whether physical compliance or buying GHG quota is cheaper at any given time. Renewed volatility in gasoil prices, brought on by the collapse of the fragile ceasefire that followed the signing of the US-Iran Memorandum of Understanding, has also weighed on HVO buying interest. Traders said the uncertainty has encouraged many market participants, particularly smaller buyers, to delay purchases and adopt a wait-and-see approach. But market participants expect prices to strengthen once Rhine water levels rise, with HVO-specific drivers also pointing to a tighter supply-demand balance in the months ahead. The case for HVO RED III compliance targets are set at record levels across many European demand centres this year. In Germany alone, Argus Analytics estimates HVO demand at around 2.1mn t in 2026, up from around 800,000t in 2025, after Germany's RED III implementation entered into law in early June. The new legislation abolished the practice of double counting for advanced feedstocks listed in part A of RED's Annex IX, which is expected to significantly boost HVO demand this year. Germany will require higher absolute volumes of renewable fuels to meet greenhouse gas (GHG) reduction quotas, supporting demand for drop-in fuels such as HVO. Increased demand from the Netherlands could also lend support to the market, participants said. Dutch renewable fuel tickets have traded at a discount to physical HVO for most of 2026, partly because ticket generation has increased as a larger volume of renewable transport credits has been created from electric vehicles (EVs) and biomethane than in previous years. In the Netherlands, on an equivalent basis as the tickets, HVO classes II and IV ended at 40.52c/kg CO2e and 51.69c/kg CO2e on 10 July, respectively, compared with 37.62c/kg CO2e and 48.50c/kg CO2e for the equivalent tickets, LRE-B and LRE-G. On the HVO supply side, the finalisation of the new US renewable volume obligation in April has created a domestic requirement that is expected to outpace US HVO production. This has effectively eliminated the exportable surplus that previously flowed to Europe, which made the US one of the region's biggest HVO importers. The US had an exportable surplus into Europe of around 750,000t in 2025, according to Argus Analytics. Europe will have to increasingly rely on HVO supply from Singapore, China, Malaysia and Canada, which could also flow in part to the US. US output has also faced operational challenges. A reported explosion at PBF's facility in May, combined with hydrocracker maintenance at Phillips 66's Rodeo refinery has reduced available supply. A third US facility may undergo a turnaround this summer. In Europe and Asia, expected maintenance at several production facilities this summer — including Ecoceres and Neste — is expected to constrain supply in the near term, lending further support to prices. Expectations of firmer prices are reflected in the Class II forward curve. The HVO Class II Argus -settled Ice contract as a differential to gasoil has remained in contango since 6 July and peaks in October. This structure is partly driven by the backwardation in the gasoil curve, reflecting expectations that tensions between the US and Iran will ease and HVO premiums to gasoil adjust higher as a result. But the outright HVO curve is also slightly in contango, with prices peaking in September. This suggests that HVO-specific fundamentals are likewise pointing to higher outright prices in the near term. By Evelina Lungu HVO fob ARA outright $/t Cost difference: Blending vs ticket purchase (Germany) €/t Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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