Summary

This report provides an overview of U.S. biofuel markets, noting renewable diesel’s faster recovery relative to biodiesel, strong growth in renewable jet fuel, and steady expansion in ethanol exports supported by international demand. Feedstock utilization shows mixed trends, with soybean oil strengthening while imports of used cooking oil and tallow declined significantly.

Biomass-Based Diesel

Biomass-based renewable diesel production surged 43% in June to 241 million gallons, the second-highest volume on record behind December 2024, according to the Environmental Protection Agency. Output for the first half of the year reached 1.13 billion gallons, down 5.8% year-over-year. 

Biodiesel production totaled 97 million gallons, up 1.3% from the previous month. Year-to-date production was down 33% at 790 million gallons. Total biomass-based diesel production has been heavily challenged since the expiration of biofuel tax credits at the end of December. Renewable diesel production has bounced back more rapidly than biodiesel due to facilities being able to adapt better. 

Renewable jet fuel production rose 9.6% in June to 18 million gallons. Year-to-date production is up 385% from last year at 64 million gallons. 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 1.38 billion gallons in May, up 4.7% from the previous month and slightly higher than May 2024, according to data from the Energy Information Administration. Year-to-date output rose to 6.7 billion gallons, up 2.3% from the same period last year. 

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. 

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 June exports totaled 174 million gallons, down 6% from the previous month but were still 30% higher than June 2024 volumes. Canada remained the top destination for U.S. ethanol, accounting for 37% of shipments. Exports to India surged by 158% to a five-month high of 24.2 million gallons. Higher shipments were also reported for South Korea, the Philippines, and the United Kingdom. 

Year-to-date exports rose to 1.064 billion gallons, 10.4% higher than a year ago.

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 2.931 billion pounds in May, up 11.6% from the previous month, according to the EIA. Canola oil usage rose by 5.2% to 142 million pounds. Corn oil usage jumped 7.6% higher from April to 423 million pounds. 

UCO usage in biofuel production totaled 468 million pounds in May, up 5.2% from the previous month. Beef tallow rose 5.6% from April to a record volume of 813 million pounds in May. 

Soybean oil used in biofuel production totaled 1.025 billion pounds, up 24% from April and the highest monthly volume since December 2024. Soybean oil accounted for 34% of total feedstock usage despite an increase in usage of UCO and beef tallow. Soybean oil used in biodiesel production totaled 581 million pounds, up from 575 million the previous month. Soybean oil used in renewable diesel jumped to 444 million pounds, up from 256 million in April. 

Increased imports of foreign feedstocks such as UCO and beef tallow have led to lower overall usage of soybean oil in biofuel production. 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 14% for the first five months due to lower biofuel production.

Biofuel Feedstock Imports

U.S. feedstock imports of canola oil, UCO, and beef tallow fell 30% in June to 814 million pounds, according to data from the U.S. Census Bureau. 

Canola oil imports fell 3% to 460 million pounds following sharp increases the previous month. UCO imports totaled 206 million pounds, plummeting nearly 57% from May and were the lowest volume since February 2024. Beef tallow imports fell 30% to 147 million pounds. 

Canola oil imports are down 32% for the first half of the year. UCO shipments are still up 10% during the same period despite the large drop in June. Beef tallow imports have been the most resilient of the three, sitting 21% higher than last year. 

Analysis

U.S. biofuel supplies rebounded in the second quarter of 2025, growing five percent from the previous quarter. Renewable diesel and biodiesel experienced sizable gains, as biofuel producers picked up production following the large setback in the first quarter. Two-thirds of U.S. biodiesel during the first half of the year was produced by soybean oil. 

Despite the rebound in the second quarter, biodiesel and renewable diesel production trail prior years due to the drop in first-quarter output. The proposed 2026 and 2027 biofuel blending mandate is expected to increase output, but biofuel producers will have to figure out how to meet obligations with proposed restrictions on foreign-based feedstocks. 

Ethanol output remained fairly flat but continues to operate at a record pace despite lower corn crushings. Exports have been a sizeable driver of demand amid growth from European and Asian countries.

Report #14

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