No Bull Insights | Biofuels Blast

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s mentioned late last week, March soybean oil use in U.S. biomass-based diesel production reached an all-time monthly record of 1.283 billion pounds, up more than 20% from February and eclipsing the previous record set in 2024.

Strong tailwinds from 45Z, the closure of the Strait of Hormuz, and EPA's record-large RVO continue to pull every available pound of fat and oil into biomass-based diesel production.

What stands out most though is just how volatile feedstock demand has become over the past few years — largely driven by shifts in policy.

After reaching a modern-day low in both physical demand and share of total feedstock consumption in 2025, soybean oil has staged a remarkable comeback in 2026.

The feedstock captured its highest share of biomass-based diesel demand since 2023 in both January and February before slipping to 41% in March.

Canola oil tells a similar story.

After demand collapsed in 2025 following the transition from 40A to 45Z, canola oil has staged a sharp comeback in 2026.

March demand surged to 403 million pounds — up 113% from February and the highest monthly total since December 2024. Its share of total feedstock demand climbed back to roughly 12%, the highest level since the final months of the blender's credit.

Few charts better illustrate how quickly policy can reshape feedstock economics.

Tallow tells a different story.

Unlike soybean oil and canola oil, demand never disappeared. In fact, tallow was one of the biggest winners of the original 45Z thanks to its status as a waste feedstock with a low carbon intensity score.

Demand eventually peaked near 900 million pounds, while tallow's share of total feedstock consumption approached 30% several times throughout 2025 and early 2026.

But the 2026 charts suggest the market may be running into a new challenge.

For the past few years, U.S. biofuel policy effectively turned the country into a magnet for global tallow supplies. Domestic biofuel demand exploded and imports soon followed.

Now, that dynamic is beginning to change. The amended 45Z rules favor feedstocks sourced from the U.S., Canada, and Mexico, putting major tallow suppliers such as Brazil and Australia at a disadvantage. Combined with higher tariffs, those policy changes are beginning to reshape global trade flows and limit the availability of imported tallow to the U.S. market.

The UCO story is even more dramatic.

Under 40A, imported used cooking oil was one of the biggest winners as cheap imports flooded U.S. feedstock markets.

Demand regularly exceeded 600 million pounds per month while feedstock share frequently topped 20% of total consumption.

The challenge was that there was often little way to verify whether every pound arriving at U.S. ports was actually used cooking oil.

Then came 45Z in 2025.

The new tax credit effectively shut imported UCO out of the incentive structure altogether, while tariffs simultaneously targeted many of the industry's largest suppliers.

By early 2026, UCO demand had fallen back to pre-renewable diesel boom levels, with feedstock share cut roughly in half to just 10%.

Demand collapsed and market share followed.

Corn oil has quietly become one of the more interesting feedstocks in the biofuels story.

While other feedstocks surged and collapsed with changing policy, corn oil quietly kept grinding higher.

As a domestic waste byproduct of ethanol production, distillers corn oil carries one of the lowest carbon intensity scores in the feedstock pool — making it one of the most valuable feedstocks under 45Z.

March demand reached a record 432 million pounds as producers continue to favor domestic distillers corn oil over imported alternatives.

Today, 70% of U.S. corn oil production now finds its way into biofuel markets.

Step back and look at the full feedstock picture and the winners and losers become clear.

Before 45Z, the biomass-based diesel industry was steadily shifting toward imported UCO and tallow at the expense of crop-based feedstocks like soybean oil.

45Z changed that — twice.

After crop-based feedstocks were pushed to the sidelines in 2025, soybean oil and canola oil are reclaiming lost share in 2026. At the same time, tallow demand has pulled back from its highs, UCO continues to make new lows, and corn oil continues to hold its ground.

Just as importantly, total feedstock demand surged back above 3 billion pounds in March — the highest level since 2024 — a reminder that the story isn't just about who wins and loses market share, but about sourcing enough feedstocks to satisfy EPA's record-large biomass-based diesel mandates in 2026 and 2027.

The answer lies in the share chart below.

While policy may have shuffled the deck a time or two, EPA's record-large mandates are increasingly pushing the industry back toward the crop-based feedstocks it once relied on before imported fats and oils reshaped the market.