Historically, we crushed for meal (to feed pigs and chickens) and treated oil as the byproduct. The Renewable Diesel (RD) boom flipped that script. We started crushing for oil to feed the demand, leaving us with a glut of meal as the byproduct. That structural inversion is the root of current market tension.
We are now in the “Feedstock Era,” where renewable energy mandates have spurred a massive expansion in U.S. processing capacity. However, as we close out 2025, the “gold rush” margins of recent years have cooled, replaced by a complex matrix of trade tensions, feedstock competition, and structural oversupply.
This article dissects the current state of the soybean crush, examining why margins are normalizing and where they could possibly go in the next 6–12 months.
Current Market Conditions
As of November 2025, the crush landscape is defined by a “Capacity vs. Demand” mismatch. The U.S. has successfully built the processing infrastructure for a renewable diesel future, but the market dynamics have shifted unexpectedly.
U.S. Supply
Because we are crushing at high rates to get the oil, we are producing record amounts of soybean meal. The problem? U.S. livestock herds haven’t expanded fast enough to eat it all. We are forced to export this surplus meal, but the global market is crowded. South America (specifically Argentina and Brazil) is aggressive on price, forcing U.S. meal values lower to stay competitive. Cheap meal drags down the entire crush equation.
Despite a solid 4.3 billion bushel crop in 2025, the physical flow of beans has been sluggish. U.S. farmers, facing lower flat prices, have locked the bins. This has firmed up the cash basis. When crushers have to bid up to pry beans out of the farmer’s hands, but can’t sell the meal or oil at a premium, the margin gets squeezed from both ends.
Note: In the real world, margins are dictated by basis—the local cash price differences. Right now, board margins might look decent, but if you have to pay up for cash beans in the Midwest because farmers aren’t selling, your real margin shrinks fast.
Oil Demand & Biofuels
The primary driver for the recent crush capacity expansion (up ~14% since 2023) was the anticipation of demand for soybean oil from the Renewable Diesel (RD) and Sustainable Aviation Fuel (SAF) sectors.
● While domestic biofuel capacity has exploded to over 4.5 billion gallons, U.S. soybean oil is losing market share to imported low-carbon intensity (CI) feedstocks. Imported Used Cooking Oil (UCO) from China and tallow flooded the market, undercutting domestic soy oil prices until tariffs put pressure on Chinese imports.
● The “Oil Share” of the crush value—which surged to nearly 50% during the 2022 boom—has seen volatility, struggling to maintain the premium needed to subsidize cheap meal.
Trade Flows
Geopolitics have returned to the forefront with escalating trade tensions and tariffs, they effectively froze new U.S. soybean sales to China for late 2025/early 2026 delivery until recently China committed to increasing its purchases of U.S. soybeans following a trade agreement, with a commitment to buy 12 million metric tons by the end of 2025 and 25 million metric tons annually through 2028 which is slightly under historical average.
● Brazil’s Dominance: China has pivoted aggressively to Brazil, which is forecasting a record 165+ MMT crop for 2025/26. Brazilian export premiums are elevated, while U.S. Gulf basis has softened due to lack of export demand.
● The Result: U.S. beans are “trapped” domestically. While this keeps input costs low for U.S. crushers, the lack of export outlets & feed demand for the resulting soybean meal is a major bearish anchor.
Margins
Crush margins in late 2025 are best described as “normalizing with downside risk.” We have exited the historic $2.00-$3.00/bu margins seen in previous years and are returning to a $1.10-$1.50/bu range.
Why the Compression?
1. Meal Glut: The U.S. is crushing for oil (to feed renewable diesel plants), creating a massive surplus of soybean meal. With livestock herds (especially hogs) stabilizing but not expanding rapidly, domestic meal demand cannot absorb the supply. Considering we get 4x as much meal as we do oil from crush, that leads us to our only other option; Export the meal, but South America is dominating that market too.
2. Capacity Overhang: With new plants in North Dakota and Kansas now fully operational, processing capacity exceeds the current margin structure’s ability to support full utilization.
3. Basis Resilience: Despite the lack of Chinese buying, U.S. farmers are holding beans, keeping cash basis levels firmer than the futures board suggests. This squeezes the processor’s buy-side.
Forecast: The Next 6–12 Months
Looking ahead to the first half of 2026, the outlook for crush margins is cautious. The market is transitioning from a “scarcity” mindset to a “management of surplus” mindset.
Base Case Scenario:
● Margins: Possibly Remain range-bound ($1.00 – $1.50/bu).
● Dynamics: U.S. crush rates can slow slightly below capacity. The market will wait for the U.S. Treasury’s final guidance on the 45Z Clean Fuel Production Credit.
Bull Case Scenario: The Policy/Weather Pivot
● The 45Z Tax Credit Ruling: The industry is waiting for final Treasury guidance on the Clean Fuel Production Credit (45Z). If the U.S. government cracks down on imported UCO (requiring strict traceability or banning non-domestic feedstocks), demand for U.S. soy oil will skyrocket overnight.
● La Niña 2.0: If Southern Brazil or Argentina suffers a late-season drought, the global meal surplus vanishes. The U.S. would suddenly become the meal supplier of last resort, lifting product values.
● Outcome: A sudden shortage of veg oil could send SBO futures rallying toward 60c/lb. Crush margins could expand back toward $1.50-$2.00/bu as processors race to secure oil.
Bear Case Scenario: The Glut
● Catalyst: If the trade war rhetoric with China heats up, U.S. bean exports could collapse, leaving even more supply trapped domestically. Combined with continued high imports of cheap waste oils for biofuel.
● Outcome: The U.S. is burdened by meal it cannot export and oil it cannot sell at a premium. U.S. plants may dial back run-rates. If they can’t move the meal, they can’t justify running at 95% capacity just to chase cheap oil. Crush margins could compress toward breakeven ($0.60-$.80/bu), forcing older less efficient plants to go into maintenance.
Conclusion & Strategic Takeaway
The soybean crush market is currently suffering from “indigestion.” We built massive capacity to feed a biofuels boom that was being satisfied by imported waste fats and created a glut of soybean meal. For the next 6 to 12 months, the future of the crush spread will not be determined by how many beans U.S. farmers grow, but by regulatory decisions in Washington regarding biofuels and weather patterns in Mato Grosso. Until the U.S. resolves the oversupply of meal or restricts the import of competing vegetable oils, the crusher has lost their leverage