Summary

U.S. biomass-based diesel production slumped in May, down 21% from April, but renewable jet fuel hit a record high. Ethanol remains a bright spot with year-to-date output up 2.6% and exports surging to a May record. Meanwhile, feedstock trends are shifting: soybean oil use is down but still accounts for about 30% of domestic biofuel production. Used cooking oil (UCO) and tallow growth could be challenged by recent EPA proposals and Trump’s Big Beautiful Bill. 

Biomass-Based Diesel

Biomass-based renewable diesel production totaled 168 million gallons in May, down 21% from the previous month, according to data from the Environmental Protection Agency. Output for the first five months totaled 888 million gallons, down 8% from the same period last year. 

Biodiesel production totaled 96 million gallons, down 5% from May 2024. Production backed off after rising for three consecutive months. Year-to-date production was down 34% at 431 million gallons. Total biomass-based diesel production has been heavily challenged since the expiration of biofuel tax credits at the end of December. 

Renewable jet fuel production jumped 23% higher to a record 16 million gallons in May. Year-to-date production is up 351% from last year. The drop-in alternative to petroleum-based jet fuel has seen substantial growth since the renewable diesel boom, primarily in 2024.

While biomass diesel production took a sizable hit in the first quarter of 2025, renewable jet fuel experienced sizable growth and more than doubled from the previous quarter as new production facilities came online. 

Ethanol

U.S. ethanol production totaled 1.287 billion gallons in April, down 6% from the previous month but 4% higher than April 2024, according to data from the Energy Information Administration. Ethanol production has been off to a strong start this year despite a lower print in February. 

Ethanol processors have been able to achieve record output this year despite lower crush volumes. In April, the corn ethanol conversion rate was about 3 gallons of ethanol per bushel of corn, according to calculations using USDA crush data and EIA production data. 

Year-to-date production is up 2.6% from a year ago at 5.346 billion gallons and is on track for a new record. Strong international demand for U.S. exports has kept ethanol processors optimistic despite a rocky start to the primary driving season. However, domestic gasoline consumption has improved significantly over the past month after rebounding from seasonally low levels. 

Monthly data from the U.S. Census Bureau showed May exports rose to 185 million gallons, up 7.6% from April and 20% higher than May 2024. That was also a record for the month of May. Canada accounted for two-thirds of total shipments. Exports to the United Kingdom rebounded and nearly tripled to 30.9 million gallons. Exports to the European Union, which was the third-largest destination, fell 7% from April. 

Year-to-date shipments are up 9% from last year at 890 million gallons and are well on track to hit a new record. 

Carbon emissions policies in countries like Canada have boosted demand for U.S. ethanol. Green policies in the European Union have led to increased exports. Central and South America have also been major growth areas for the U.S. ethanol market. 

Feedstock Usage

Feedstocks used for biofuel production totaled 2.628 billion pounds in April, down 2.4% from the previous month, according to the EIA. Canola oil usage fell 4.2% during the month to 135 million pounds. Canola oil usage rose 2.6% from March to 395 million pounds. 

UCO usage in biofuel production totaled 445 million pounds, down 8.6% from the previous month. Beef tallow usage surged 9.4% to a record 770 million pounds. 

Soybean oil used in biofuel production totaled 829 million pounds, down slightly from the previous month. Soybean oil accounted for 31.5% of total feedstock usage due to declines in UCO and beef tallow. Soybean oil used in biodiesel production totaled 575 million pounds, up from 502 million in March. Soybean oil used in renewable diesel fell to 256 million pounds, down from 331 million the previous month. 

Increased imports of foreign feedstocks such as UCO and beef tallow have led to lower overall usage of soybean oil in biofuel production. Beef tallow has seen the strongest growth this year due to its lower cost as a feedstock. Meanwhile, canola oil, soybean oil, and UCO are down for the first four months of the year compared to a year ago. Canola oil has seen year-over-year growth.

Total feedstock usage is down nearly 18% for the first four months due to lower biofuel production. Total biofuel capacity slipped lower in April to 24.878 billion gallons. That was slightly lower than the peak of 25.112 billion gallons set in June 2024.

Biofuel Feedstock Imports

U.S. feedstock imports of canola oil, UCO, and beef tallow rose by 39% in May to 1.16 billion pounds, according to the U.S. Census Bureau. 

Canola oil imports jumped higher during the month to 475 million pounds, up 29% from April. UCO imports totaled 474 million pounds, 121% higher than a month ago. Meanwhile, beef tallow imports fell 17% to 211 million pounds. 

Canola oil imports are down 36% for the first five months of the year. Meanwhile, UCO imports are up 21% from a year ago, though growth has slowed compared to 2024. Beef tallow imports remained resilient as well, with year-to-date shipments 15% higher than a year ago. Continued growth from Brazil has helped support tallow imports. 

Notably, year-to-date imports from Argentina have more than doubled from 2024, as supplies have become regularly available. 

Analysis

On July 8, agricultural and biofuel groups testified before the U.S. Environmental Protection Agency, expressing strong support for the agency’s proposed renewable fuel blending mandates for 2026 and 2027. The proposal would significantly raise biomass-based diesel production, while simultaneously restricting the eligibility of biofuel produced from foreign-based feedstocks from receiving biofuel credits. 

Additionally, President Trump’s One Big Beautiful Bill Act extends the 45Z tax credit through 2029. The exclusion of non-USMCA feedstocks in the bill and the EPA’s proposed rule favors domestic feedstocks, primarily soybean oil. UCO and beef tallow stand to be the most negatively impacted by the latest proposal and law. 

U.S soybean processors expressed optimism over the latest developments for biofuel production. The potential the U.S. has to expand its global footprint in soybean meal exports would support continued incentives to crush more soybeans, providing more feedstock for biofuel production.

Report #13

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