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EPA Pulls Back on Support for Fuel from Soybean Oil:



Prices for soybean oil, a byproduct left over after crushing the beans for animal feed, soared to records last year owing to growing government incentives to make it into diesel fuel. Then, in December, the EPA proposed to mandate less use of biomass-based diesel through 2025 than many had expected, pruning the value of credits the agency issues to makers of biofuels. Soybean oil futures dropped more than 15% in the week after the announcement.



“The numbers came as a bit of a shock,” said Dave Walton, who farms about 750 acres of corn and soy with his wife and son in Wilton, Iowa. Mr. Walton, who manages his exposure to volatile vegetable prices by trading futures and options with an app on his phone, said he had hedged two-thirds of his crop, limiting his losses.

The price of soybean oil has roughly doubled over the past three years, largely because of demand to make fuel for trucks and trains. Futures are currently trading at about $4.23 a gallon, compared with about $2.68 a gallon for diesel.

That difference means companies have little economic motive to make diesel from soybean oil without government incentives, which are aimed at reducing carbon emissions.

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