Biodiesel and renewable diesel are the two chief varieties of biofuel for which soybean oil is the primary input in the United States. Palm oil, corn oil, yellow grease, canola, tallow, used cooking oil, algal oil and others are also constituent feedstocks in the United States, with more prevalent use internationally. The share of domestic disappearance of soybean oil for BBD use has increased from negligible at the turn of the 21st century to almost 49% in the crop year beginning October 2024. In that time, domestic disappearance of soybean oil increased 63%.

Used cooking oil (UCO) has emerged as a notable feedstock for renewable diesel and biodiesel production. This is primarily due to its attractiveness as a low-cost waste product with a low carbon intensity. Programs like California's Low Carbon Fuel Standard have played a crucial role in stimulating both the capacity for and demand for UCO as a fuel source. Increased environmental awareness and the adoption of circular economy practices are fostering the collection and reuse of UCO.

Biodiesel is a biofuel created through a process called transesterification, yielding a fatty acid methyl ester (FAME, to which biodiesel is sometimes referred) that can be blended with petroleum diesel up to a 20% blend wall to power unmodified diesel engines. Renewable diesel, conversely, is chemically identical to petroleum diesel, allowing it to be used unblended in unmodified diesel engines. Its chemical resemblance to petroleum diesel also allows for renewable diesel to be transported through preexisting petroleum pipelines. 

The relative usefulness of renewable diesel is reflected by the relative difficulty in its production compared to biodiesel, lending to biodiesel’s historical prevalence in domestic capacity. Thanks to increasing production capacity buoyed by state and national incentive policy, however, renewable diesel production is rapidly accelerating. Operable production capacity of renewable diesel and other biofuels exceeded that of biodiesel in the United States in July 2022 and exceeded biodiesel capacity by 140% in July of 2025.

Renewable diesel in the United States has historically been produced and consumed in West Coast states; California, Washington and Oregon each offer incentive programs for production in addition to being subject to the national Renewable Fuel Standard. Biodiesel production and use, by contrast, is more prevalent in the upper Midwestern states of Minnesota, Iowa and Illinois.

Ethanol is the dominant form of biofuel in the United States, though its share is diminishing. In the United States, ethanol is primarily derived from corn via distillation, while in other countries ethanol may be primarily derived from sugar, crop residue or wood chips. The U.S. Department of Energy estimates that 98% of commercial gasoline in the United States contains ethanol, with a 10% blend wall (E10) being the most common formulation. California, the nation’s largest motor fuel market, recently gained momentum with Governor Newsom signing Bill AB30 into legislation, allowing the sale of E15 gasoline in the state in October 2025. This change could lower gasoline prices by up to $0.20 per gallon, according to a study conducted by the University of California, Berkeley, and the U.S. Naval Academy. E15, which contains 15% ethanol, has been widely adopted in other states.

The share of corn used for ethanol peaked in 2012 at 40% of total domestic corn disappearance after a sharp rise in the first decade of the millennium, following the then-new RFS mandate and totalling 35% in the current crop year 2025.

The U.S. biofuel sector in the 21st century has been defined by significant growth and a strategic shift in focus, primarily driven by the Renewable Fuel Standard (RFS). The initial rapid expansion centered on corn-derived ethanol; however, its growth has since moderated. Concurrently, biomass-based diesel (BBD) fuels – biodiesel and, increasingly, renewable diesel – have surged in prevalence, utilizing diverse feedstocks like soybean oil and waste products such as used cooking oil (UCO). The RFS continues to shape the economic landscape for biofuel producers and the broader agricultural and energy sectors. Proposed changes to the RFS signal a continued commitment to domestic fuel and feedstock production, underscoring the enduring policy influence on the profitability and future direction of the U.S. biofuel market.

As market dynamics evolve, CME Group will continue to provide risk management solutions for our changing world. Learn more about the Soybean complex and suite of biofuel products at www.cmegroup.com/agriculture and www.cmegroup.com/energy.