Regulatory shifts and trade friction defined the feedstock market throughout October. Even with energy markets reversing after the Democratic congressional sweep in the US, biogenic raw materials held their ground, supported by rigid biofuel mandates.
We are seeing a clear decoupling of waste-based feedstocks from traditional energy indices. In Europe, anti-dumping tariffs on Chinese biodiesel drove imports to record lows. Forced away from Asian flows, European buyers are intensely competing for domestic Used Cooking Oil (UCO) and category 3 animal fats. To hit mandate targets, blenders are prioritising traceable, regional waste, keeping spot prices elevated despite a broader drop in fossil fuels.
Sustainable Aviation Fuel (SAF) raw materials face their own hurdles that prevent prices from sliding. The September 2026 IRS guidance for the Section 45Z tax credit heavily restricted reliance on imported waste oils by limiting eligible fuels to feedstocks from the US, Mexico, or Canada. It also banned negative emissions rates for everything except animal manure. This created a massive, localized demand floor for North American feedstocks and premium animal fats.
The ongoing squeeze on premium waste oils is forcing renewable diesel and conventional biodiesel producers to adapt. To offset the constrained UCO pipeline and align with the 45Z geographic limits, producers are turning back to crop-based alternatives where permitted. This localized shift rapidly cleared out regional inventory overhangs of rapeseed oil (RSO) and narrowed the price spreads between conventional crop feedstocks and waste lipids.
The outlook for feedstocks remains tight and structurally bullish. While falling petroleum prices offer some inflation relief, strict US feedstock limitations and aggressive European aviation mandates will stop raw materials from following oil downward. As we enter peak winter demand, producers will likely face sustained margin pressure and fierce competition for highly traceable, localised feedstocks through the end of the year.
