At Commodity Classic this week, the biofuels debate moved from Washington talking points to farm-gate math. With EPA’s proposed Renewable Volume Obligations now sitting at the White House for review, the outcome is poised to ripple through soybean oil crush margins, renewable diesel run rates and, ultimately, how many acres farmers devote to corn and soybeans this spring.
During a live taping of U.S. Farm Report, analysts Arlan Suderman of StoneX, Chip Flory of AgriTalk and Naomi Blohm of Total Farm Marketing by Stewart-Peterson made it clear: this isn’t just about percentages on a policy sheet. It’s about whether renewable diesel plants jump from 60% to near full capacity, whether USDA’s 17-billion-pound soybean oil forecast proves tight, and whether growers need to “buy acres” before planters roll.
In a market perched at technical resistance and staring down seasonal headwinds, timing may matter as much as the final RVO number. A bold, immediate reallocation of small refinery exemptions could ignite demand and shift acreage battles overnight. A slower rollout, or even delayed clarity, could leave spring planting decisions hanging in the balance.
Five Scenarios and a Need for Certainty
“There’s plenty of talk, but we don’t know for sure,” Suderman says of the pending RVO announcement. “But we have some ideas on what it’s going to be.”
After years of small refinery exemptions (SREs) hanging over the market, EPA has now cleared exemptions dating back to 2016. That removes what Suderman described as a lingering weight on the industry. But the key question now is reallocation.
“There’s about five different scenarios that could still come out of this,” he explains. “So there is a lot of variability.”
The most widely discussed outcome would reallocate 50% of exempted volumes back to larger refiners. But Suderman noted that number could reach 75%, and some industry participants still hope for 100%.
“What we expect to happen is 50%, possibly up to 75% of the small refinery exemptions would be put back in for larger refineries,” he says. “Now what we don’t know is over how many years that’ll be. Will it be over one year, two years or four years? So that makes a big difference.”
Another unresolved issue is the RIN credit for imported feedstocks.
“What we don’t know is what will they do with the 50% RIN credit for imported feedstock,” Suderman says. “There’s a lot of pressure to move that back up to 100%. It could be something in between. It could be one year it’s one thing, the other year it’s another.”
Despite the uncertainty, Suderman sees most scenarios as constructive.
“Regardless, we see most all the possible scenarios here as being positive,” he says. “The biggest thing is not what the numbers say, but just having certainty.”
And once that certainty arrives, the production response could follow quickly.
“It’s going to take 45 to 60 days, we feel like, to really get the industry going,” he says. However, with RIN values rallying, “yesterday we got RINs up high enough that we can start profitably making renewable diesel. So we may ramp it up a little bit quicker.”
Suderman expects a finalized decision from EPA by the end of March , which is a timeline even EPA has stated.
Even 50% Is a Win?
Flory has been in direct conversations with biofuel leaders at Commodity Classic, including representatives from the Renewable Fuels Association and Clean Fuels Alliance America.
“The buzz is that it’s going to be half,” Flory says. “Sometimes the buzz isn’t right… Could be up to 75%. I think there’s still hope that it is going to 100%.”
But even at 50%, he sees progress.
“In my mind, with the way the trend was going, even at 50% reallocation, I’m going to call it a win for the industry,” Flory says.
He emphasizes that the RVO ruling outweighs other ethanol policy wins.
“The RVO decision, I think, is so important,” he says. “It’s more important in my mind than E-15 getting it done.”
The reason is immediate demand potential. Biomass-based diesel refiners have been operating at sharply reduced rates.
“They were running at what, Arlan, 60% capacity?” Flory asked during the discussion. “If we all of a sudden have to ramp this back up to 90%, 95%,” Flory continues, “we’re going to use all 17 billion pounds of bean oil in the year ahead that USDA says we’re going to.”
Markets Sitting at Resistance
Blohm believes the market has already begun factoring in future biofuel demand, but she questions how aggressively policymakers will move.
“If we came out with this information and they said it’s going to be full bore, sooner than later, the market still could respond with higher values,” she says
However, she also pointed to inflation sensitivities.
“There’s also the balance of governments wanting to not have food prices go too high too quickly,” Blohm says. “Especially with this administration still trying to bring beef prices down. So I don’t know that they’re going to immediately give us all of this great news that we’re wanting.”
Instead, she expects a more gradual rollout.
“I’m on the slow roll carryout, which would be bringing that demand up, but slowly over time,” she adds.
Technically, she sees the grain complex at a critical tipping point.
“We’re right at a perch for market prices right now,” Blohm says. “Corn, beans, wheat — all near some short-term major resistance levels where we’re waiting for fresh, big new news.”
If that news comes, either from biofuels or South American weather, the move could be sharp.
“If we can get some new bullish news, either bad weather on the safrinha crop, great news regarding the biofuels, we have reasons for this marketplace to explode higher,” she says. “If we do not get good news soon, seasonals could kick in, when prices often soften into late March. The timing of this is critical. Timing is critical.”
Acreage Wild Cards: RVOs and China
The RVO decision intersects directly with planting intentions and potentially with U.S.-China trade talks expected in April. Suderman points to both as pivotal acreage drivers.
“Two big critical factors that will impact planting intentions are the RVO and trade deal with China,” he says.
If both land favorably, soybeans may need to compete for ground.
“If both of those come in favorable, we could see soybeans having to buy acres,” Suderman says.
But timing complicates the picture. USDA surveys for the March Prospective Plantings report close around mid-March.
“Most of the surveys come in front-loaded,” Suderman noted. If policy clarity arrives after surveys are returned, “we’ll be waiting until the June survey to really feel like we have a handle on the number of planted acres.”
Blohm questioned whether corn acreage will ultimately exceed early USDA projections.
“My thought would be that we’re going to plant less corn than last year,” she said. “But is it going to be 94, 95 or 96? That’s the question.”
Even at those levels, balance sheets remain comfortable without stronger demand.
“With 94, 95, 96 million acres, including trendline yield, as good as demand is, you’re going to have carryout for corn near 1.8, 1.9 or 2 billion bushels, unless we can get some of this renewable stuff happening fast,” says Blohm.
How Much Demand Is Enough?
Flory acknowledged that the corn market has already built substantial usage.
“We’re already looking at $16.4 billion in total demand. That’s a huge number,” he says.
To materially shift prices, though, he says additional growth is needed.
“Looking forward, what does it take? We need to see that shift in demand,” Flory says. “Add another 300 million bushel, 400 million bushels of demand. We can do that if we can get some of these biofuel priorities.”
Are Grains the Bargain Buy?
Beyond domestic policy, outside markets could amplify moves.
“If things flare up with Iran, that’s going to be a game changer for crude oil,” Blohm says. “Which would pull corn prices higher.”
She’s also monitoring palm oil production in Malaysia.
“They’re having too much rain right now, and that’s affecting production,” she says. “If they’ve got lower production, then maybe we see a kick up for soybean oil demand here.”
Suderman added a macro lens, noting that grains and oilseeds have shown strong historical correlation with inflation measures.
“When you look at what the funds want to own if we see a return of inflation pressures, the highest correlation over the last 10 years has been the grain and oilseeds to the CPI, followed by energy,” says Suderman.
A Decision Landing at Planting
The EPA’s RVO decision is expected within weeks — right as planters begin to roll.
If policymakers deliver aggressive reallocation and clarity, renewable diesel plants could ramp from 60% toward full capacity. Soybean oil demand would tighten. Soybeans could push to buy acres.
If the announcement disappoints, or even arrives too late, seasonal pressure could dominate the spring trade.
As Suderman put it, the issue isn’t just the final percentage.
“The biggest thing is not what the numbers say,” he says. “It’s having certainty.”
For farmers making planting and marketing decisions in real time, that certainty can’t come soon enough.
