Group 1: RVO Settings and Overall Trends - The 2026 - 2027 RFS final rule unifies the RVO measurement of BBD from "physical gallons" to "RINs", aligning with other fuel categories and simplifying compliance [1][2] - The total RVO in 2026 - 2027 reaches 26.81 and 27.02 billion RIN respectively, with an increase of over 20% compared to 2025, mainly driven by biomass - based diesel and advanced biofuels [2][3] - Cellulose biofuel RVO shows steady growth, reaching 1.36 and 1.43 billion RIN in 2026 - 2027 from 1.21 billion RIN in 2025, but faces terminal demand constraints [3] - The basic RVO of corn ethanol remains stable at 15 billion gallons, reducing the impact on the grain market [3] - The 70% re - distribution of SRE quotas from 2023 - 2025 to 2026 - 2027 is finalized, filling the compliance gap and stabilizing the RIN market [4][14] Group 2: Biomass - Based Diesel Analysis - In 2026, 9.07 billion RIN of biomass - based diesel is equivalent to 5.5 billion gallons, and in 2027, 9.2 billion RIN is equivalent to 6.1 billion gallons, meeting market expectations [2][5][6] - The production of biodiesel and renewable diesel is expected to be 40.7 billion gallons in 2025, 49.9 billion gallons in 2026, and 58.9 billion gallons in 2027. EIA may adjust the balance sheet [6] - The biomass - based diesel volume will increase by 35.1% in 2026 compared to 2025 and 10.9% in 2027 compared to 2026 [6] - North American raw materials (US soybean oil, Canadian canola oil, Mexican UCO) will benefit from the 45Z tax credit policy, while non - North American raw materials will be excluded from the US market [7] - The 45Z tax credit creates price differences between different raw materials. The EPA expects the supply of US soybean oil to meet the growing demand through various means, and the development of US biodiesel will drive global vegetable oil demand [8][9] - The EPA estimates that the price of US soybean oil will be 66 - 68 cents/lb in 2026 - 2027, with a risk of rising to 86 - 90 cents/lb in a high - price scenario [9] Group 3: Policy Adjustments - The EPA delays the effective date of the new equivalent values for renewable diesel, renewable jet fuel, and renewable naphtha to January 1, 2027 [10][11] - The Import RIN Reduction (IRR) policy is postponed to 2028 and later to avoid market supply shocks and rising refined oil prices, which is expected to benefit trade and raw material demand in the US, Canada, and Mexico [12] - Renewable electricity (eRINs) is removed from the list of eligible renewable fuels in the RFS program to strengthen the core position of liquid biofuels [13] - RIN generation rules are tightened, requiring a strict link between RIN generation and transportation use and adding importer joint - liability clauses [15]

Report Summary I. Report Industry Investment Rating No investment rating was provided in the report. II. Core Views - **Global Soybean Market**: In 2025/26, the global soybean market tightened slightly. Production decreased slightly, demand increased, and the inventory - to - consumption ratio declined. However, the market may continue to oscillate at a low level due to the high - yield and low - cost competition in South America [13]. - **Global Vegetable Oil and Protein Meal Market**: Both the global vegetable oil and protein meal markets tightened in 2025/26. The growth in demand outpaced production, leading to a decrease in the inventory - to - consumption ratio [42][46]. - **Palm Oil Market**: In Malaysia, palm oil area expanded in 2025, and production showed potential for recovery. In Indonesia, the government's actions may increase its control over the palm oil market, and production may also increase [52][83]. - **Biodiesel Market**: The demand for biodiesel raw materials is expected to grow globally in 2026, with a focus on the US. China's SAF market may drive an increase in raw material demand [112]. - **Soybean Meal Market**: In China, soybean imports, crushing volume, and soybean meal output all increased in 2025. The demand for soybean meal also grew, mainly driven by domestic demand [168][171][174]. - **Canola Market**: In 2025/26, the global canola market had a supply surplus. The price is expected to remain under pressure in 2026, but may be affected by trade - related events [239][300]. - **Corn Market**: The global corn supply - demand balance remained tight in 2025/26. The domestic corn market in China is expected to be in a state of loose supply, and the price may oscillate weakly in 26 [310][361]. - **Pork Market**: In the first half of 2026, the supply pressure in the pig market will continue to be released, and the price is expected to be low. In the second half, the price may rise due to capacity reduction and policy guidance [463]. - **Egg Market**: The supply of laying hens is expected to decrease in 2026, and the supply - demand situation in the egg market is expected to improve. It is recommended to take a long - position in egg futures in the first half of 2026 [503]. III. Summary by Directory 1. Global Soybean Supply and Demand Situation - **Global Oilseed Supply - Demand Pattern**: In 2025/26, the supply - demand pattern of 7 major oilseeds was slightly looser year - on - year. Production, domestic consumption, and ending stocks all increased. The inventory - to - consumption ratio increased slightly [7][9]. - **Global Soybean Supply - Demand Pattern**: In 2025/26, the global soybean market tightened slightly. Production decreased by 148 tons (-0.3%), demand increased by 964 tons (+2.3%), and ending stocks increased by 101 tons (+0.8%). The inventory - to - consumption ratio decreased to 29.4% [11][13]. - **Global Soybean Yield and Area**: In 2025/26, the global soybean yield reached a record high, with the US and Russia also hitting new highs. The global soybean area decreased slightly year - on - year but remained at the second - highest level in history [19]. - **Weather Model Change**: La Nina has a significant impact on South American soybean production, especially in Argentina where the probability of yield reduction is 90%. ENSO neutral years tend to lead to a decline in US soybean yield, while El Nino years increase the probability of yield growth [25]. - **Soybean Trade Flow**: In 2025/26, China's soybean imports increased. Brazil's exports surged, exceeding China's total imports, while US exports declined significantly [26]. - **US and Brazilian Soybean Costs**: The cost of US soybeans is increasing, while that of Brazilian soybeans is relatively low. In 2025/26, the median cost of Brazilian soybeans was 455 US dollars per acre, a year - on - year decrease of 3.8% [30][36]. 2. Global Vegetable Oil and Protein Meal Performance - **Global Vegetable Oil Supply - Demand Pattern**: In 2025/26, the global vegetable oil market tightened. Production increased by 449 tons (+2.0%), consumption increased by 566 tons (+2.5%), and ending stocks remained the same. The inventory - to - consumption ratio decreased to 13.1% [40][42]. - **Global Protein Meal Supply - Demand Pattern**: In 2025/26, the global protein meal market tightened. Production increased by 785 tons (+2.0%), consumption increased by 1320 tons (+3.5%), and ending stocks decreased slightly. The inventory - to - consumption ratio decreased to 5.9% [44][46]. 3. Palm Oil Market - **Malaysian Palm Oil Market**: In 2025, Malaysia's palm oil area expanded for the first time in 6 years. Fruit bunch and crude palm oil yields reached new highs, but the oil extraction rate decreased. Exports declined in 2025 [52][68][77]. - **Indonesian Palm Oil Market**: In 2024, Indonesia's palm oil area reached a new high. In 2025, production increased, but the yield had been declining. The government's actions may increase its control over the palm oil market [80][86][83]. - **China and Indian Palm Oil Markets**: In 2025, China's palm oil imports showed a mixed trend. The US Department of Agriculture expects an increase in 2025/26. In India, the total import of vegetable oils decreased in 2025, and the US Department of Agriculture expects an increase in palm oil imports in 2025/26 [101][107]. 4. Biodiesel Market - **Global Biodiesel Raw Material Demand**: In 2025, the demand for biodiesel raw materials in the US and China decreased, while that in Brazil, the EU, and Indonesia increased. In 2026, the demand focus is expected to shift to the US, and the growth of demand in the Indonesian market may slow down [112]. - **US Biodiesel Market**: The US EPA's proposed RVO for 2026 - 2027 shows an increase. The supply of RINs decreased in 2025, and the expected carry - over in 2026 is low, which is conducive to the increase in RIN prices and the improvement of biodiesel profits [115][130][137]. - **Indonesian and Chinese Biodiesel Markets**: In 2026, the growth rate of Indonesia's demand for palm oil as a biodiesel raw material is expected to slow down. In China, the expansion of SAF production capacity may drive an increase in raw material demand [152][157]. 5. Soybean Meal Market - **China's Soybean and Soybean Meal Market**: In 2025, China's soybean imports, crushing volume, and soybean meal output all increased. The demand for soybean meal also grew, mainly driven by domestic demand. In 2026, the supply of soybean meal is expected to be abundant, and the demand from the breeding sector is expected to remain resilient [168][171][174]. 6. Canola Market - **Market Review**: In 2025, the canola market was affected by trade relations, with prices rising in the first half and falling in the second half [229]. - **Global Canola Supply - Demand Overview**: In 2025/26, global canola production reached a record high, with an increase in ending stocks. The supply - demand pattern was characterized by oversupply [239]. - **Supply and Demand Outlook**: In 2026/27, Canada may expand canola planting. The EU's canola production increased in 2025/26 and is expected to expand planting in 2026/27. Australia and Russia may increase exports to China. The demand for canola in the EU may be postponed due to the delay of the EUDR. Canada's canola exports are in decline, and China's demand for canola is expected to remain low [249][253][266]. - **Trade Relations**: The trade relations between China and Canada and between China and Australia have an impact on the canola market. The relationship between China and Canada may improve in 2026, and the stability of the trade relationship between China and Australia needs to be further observed [293]. - **Market Outlook**: In 2026, the canola market is expected to be oversupplied, and prices will remain under pressure. However, prices may be affected by trade - related events [300]. 7. Corn Market - **Global Corn Supply - Demand Balance**: In 2025/26, the global corn supply - demand balance remained tight. Production increased by 65.15 million tons (+5.29%), and ending stocks decreased by 1.29%. The inventory - to - consumption ratio was 22.64% [309][310]. - **US, Brazilian, and Argentine Corn Markets**: In 2025/26, the US corn market had a loose supply. Brazil's corn market was tight, with a decrease in production and ending stocks. Argentina's corn production increased slightly, and the impact of La Nina is gradually decreasing [311][318][319]. - **Weather Impact**: La Nina is expected to transition to ENSO neutral in 2026. It has a significant impact on South American corn production, especially in Argentina where the yield is likely to decrease [324][327][329]. - **China's Corn Market**: In 2025/26, China's corn production increased, and the import volume decreased significantly, indicating a loose domestic supply. The selling progress was relatively fast, and there is still a demand for inventory replenishment. The demand for feed - use corn may be affected in the second half of 2026, and the corn deep - processing industry is difficult to see incremental growth [332][344][351]. - **Market Outlook**: In 2026, China's corn supply is expected to remain loose. The price may oscillate weakly and is difficult to exceed the "wheat price ceiling" [361]. 8. Pork Market - **Market Review**: In 2025, the pig price was at a low level, close to the historical bottom range. The inventory of breeding sows decreased slightly, and the slaughter volume increased [378][384][389]. - **Supply and Demand Analysis**: In the first half of 2026, the supply pressure in the pig market will continue to be released. The demand may be stimulated in the short - term. The pig production capacity cycle has peaked, and the capacity needs to be further reduced. The price is expected to be low in the first half and may rise in the second half [463]. 9. Egg Market - **Market Review**: In 2025, the supply of breeding chickens was restored, the chicken - chick replenishment volume decreased in the second half of the year, and the egg - laying hen production was mostly in a loss state. The inventory of laying hens decreased in the fourth quarter [475][479][484]. - **Market Outlook**: In 2026, the supply of laying hens is expected to decrease, and the supply - demand situation in the egg market is expected to improve. It is recommended to take a long - position in egg futures in the first half of 2026 [503].

Core Viewpoint - The U.S. Environmental Protection Agency (EPA) has proposed a plan to redistribute the small refinery exemption (SRE) obligations for biofuel blending to larger refineries, offering options of 50% and 100% redistribution, while also seeking public input on other potential ratios [1][2] Group 1: Proposal Details - The EPA's proposal includes a public comment period of 45 days, which is considered crucial by industry officials [1] - The biofuel industry advocates for a full 100% redistribution to maintain demand for products like corn ethanol, while refiners oppose this, citing increased costs [1] - The proposal is seen as a "stalling tactic" by some industry officials, indicating a lack of substantial progress [1] Group 2: Background Information - According to the Renewable Fuel Standard (RFS), refineries are required to blend billions of gallons of biofuels annually or purchase renewable identification numbers (RINs) from compliant entities [1] - Small refineries can apply for SRE exemptions if they demonstrate that blending requirements would cause financial hardship [1] - The EPA cleared over 170 SRE exemption applications from 2016, necessitating a compensation plan for the obligations [2] - The total amount of exemptions from 2023 to 2025 is equivalent to 2.18 billion RINs [2]

Report Information - Report Date: August 25, 2025 [1][4][12][15][19][23][30][32][33][37] - Report Source: Guotai Junan Futures Research [5][12][16][19][23][30][33][37] Overall Core Views - Palm oil: With the negative impact of US soybean oil SRE exhausted, international oils are rising [2][4] - Soybean oil: The trading of soybean shortage in the fourth quarter has paused, and it is consolidating at a high level [2][4] - Soybean meal: After the overnight slight increase in US soybeans, Dalian soybean meal may rebound and fluctuate [2][12] - Soybean No.1: Rebound and fluctuate [2][12] - Corn: Oscillate [2][15] - Sugar: Fluctuate in a narrow range [2][19] - Cotton: Futures prices are oscillating strongly [2][23] - Eggs: Near - term, focus on the rhythm of old hen culling; long - term sentiment remains weak [2][30] - Live pigs: The positive impact of reserve purchases has materialized, awaiting spot market confirmation [2][33] - Peanuts: Pay attention to the listing of new peanuts [2][37] Industry - Specific Summaries Palm Oil and Soybean Oil - **Fundamental Data** - Futures: Palm oil主力 closed at 9,510 yuan/ton during the day session with a 0.78% increase and 9,570 yuan/ton at night with a 0.63% increase; soybean oil主力 closed at 8,492 yuan/ton during the day with a 0.83% increase and 8,428 yuan/ton at night with a - 0.75% decrease [5] - Spot: Palm oil (24 - degree) in Guangdong was 9,540 yuan/ton, down 80 yuan; first - grade soybean oil in Guangdong was 8,670 yuan/ton, up 30 yuan [5] - Basis: Palm oil (Guangdong) basis was 30 yuan/ton; soybean oil (Guangdong) basis was 178 yuan/ton [5] - **Macro and Industry News** - Malaysia's palm oil production from August 1 - 20 was estimated to increase by 3.03% compared to the same period last month [6] - The US EPA announced the results of small refinery biofuel exemption applications, and will return 1.39 billion gallons of RIN credit for 2023 and 2024 [9] - Pro Farmer predicted record - high average yields for US corn and soybeans in 2025 [10] - Argentina's 2024/25 soybean planting area was estimated at 18 million hectares, up 8.4% from the previous year, and production was estimated at 50.9 million tons, up 5.6% [10] - In the 34th week, oil mills' actual soybean crushing volume was 227 million tons, with an operating rate of 63.81%, 134,300 tons lower than expected [10] - **Trend Intensity** - Palm oil trend intensity: 1; soybean oil trend intensity: 0 [11] Soybean Meal and Soybean No.1 - **Fundamental Data** - Futures: DCE soybean No.1 2511 closed at 3985 yuan/ton during the day with a - 0.28% decrease and 3996 yuan/ton at night with a 0.18% increase; DCE soybean meal 2601 closed at 3088 yuan/ton during the day with a - 1.28% decrease and 3108 yuan/ton at night with a 0.45% increase [12] - Spot: The price of 43% soybean meal was 3060 - 3110 yuan/ton, down 20 yuan to unchanged from the previous day [12] - Industry Data: The trading volume of soybean meal was 13.1 million tons, and the previous week's inventory was 97.4 million tons [12] - **Macro and Industry News** - On August 22, CBOT soybeans hit a two - month high, supported by Chinese demand expectations and strong soybean oil [12][14] - **Trend Intensity** - Soybean meal trend intensity: 0; soybean No.1 trend intensity: 0 [14] Corn - **Fundamental Data** - Futures: C2509 closed at 2214 yuan/ton during the day with a - 0.27% decrease and 2219 yuan/ton at night with a 0.23% increase; C2511 closed at 2175 yuan/ton during the day with a 0.32% increase and 2174 yuan/ton at night with a - 0.05% decrease [16] - Spot: Jinzhou's closing price was 2260 yuan/ton, down 20 yuan; Guangdong Shekou's price was 2360 yuan/ton, down 20 yuan [16] - Basis: The main 11 - contract basis was 85 yuan/ton; the 09 - 11 inter - period spread was 39 yuan/ton [16] - **Macro and Industry News** - Northern corn port prices were 2210 - 2230 yuan/ton, and Guangdong Shekou's prices were stable [17] - **Trend Intensity** - Corn trend intensity: 0 [18] Sugar - **Fundamental Data** - Futures: The main futures price was 5670 yuan/ton, down 18 yuan - Spot: The mainstream spot price was 5980 yuan/ton, down 10 yuan - Basis: The mainstream spot basis was 310 yuan/ton, up 8 yuan [19] - **Macro and Industry News** - Brazil's sugar production needs to be re - estimated, and India's monsoon precipitation has weakened [19] - China imported 740,000 tons of sugar in July, an increase of 320,000 tons [19] - CAOC estimated domestic sugar production, consumption, and imports for 24/25 and 25/26 seasons [20] - ISO estimated a global sugar supply shortage of 5.47 million tons in the 24/25 season [21] - **Trend Intensity** - Sugar trend intensity: 0 [21] Cotton - **Fundamental Data** - Futures: CF2601 closed at 14030 yuan/ton during the day with no change and 14155 yuan/ton at night with a 0.89% increase [23] - Spot: The price of Beijiang 3128 machine - picked cotton was 15272 yuan/ton, unchanged [23] - Spread: The CF9 - 1 spread was - 270 yuan/ton, down 10 yuan [23] - **Macro and Industry News** - Domestic cotton spot trading was partially good, and cotton yarn market trading was okay, while the cotton fabric market was weak [24] - ICE cotton futures rose slightly on Friday, driven by US interest - rate cut expectations [25] - **Trend Intensity** - Cotton trend intensity: 0 [26] Eggs - **Fundamental Data** - Futures: Egg 2509 closed at 2920 yuan/500 kg with a - 0.21% decrease; Egg 2601 closed at 3434 yuan/500 kg with a - 0.67% decrease [30] - Spot: The price of Liaoning eggs was 3.20 yuan/jin, down 0.10 yuan [30] - **Trend Intensity** - Egg trend intensity: 0 [30] Live Pigs - **Fundamental Data** - Futures: Live pig 2509 closed at 13760 yuan/ton, up 35 yuan; Live pig 2511 closed at 13840 yuan/ton, up 75 yuan; Live pig 2601 closed at 14145 yuan/ton, up 40 yuan [33] - Spot: The price of Henan live pigs was 13780 yuan/ton, unchanged [33] - Spread: The live pig 2509 basis was 20 yuan/ton, down 35 yuan; the 9 - 11 spread was - 80 yuan/ton, down 40 yuan [33] - **Market Logic** - In August, the planned出栏 volume of large farms increased, demand growth was limited, and the spot market underperformed expectations. The reserve purchase policy has been implemented, but supply pressure needs multiple rounds of reserve purchases to ease [35] - **Trend Intensity** - Live pig trend intensity: 0 [34] Peanuts - **Fundamental Data** - Futures: PK510 closed at 8008 yuan/ton with a 0.40% increase; PK511 closed at 7802 yuan/ton with a 0.64% increase [37] - Spot: The price of Liaoning 308 common peanuts was 8200 yuan/ton, unchanged [37] - Spread: The Liaoning 308 common peanut basis was 192 yuan/ton; the 10 - 11 inter - period spread was 206 yuan/ton [37] - **Spot Market Focus** - In Henan, the volume of new peanuts on the market was small, demand was weak, and prices were mostly weak [38] - **Trend Intensity** - Peanut trend intensity: 0 [41]

Report Summary 1. Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - The bearish impact of the US soybean oil SRE is over, leading to an increase in international oil prices [1]. - The trading of soybean shortages in the fourth quarter has paused, and soybean oil prices are consolidating at a high level [1]. 3. Summary by Directory 3.1 Fundamental Tracking - **Futures Prices**: The closing prices and daily price changes of palm oil, soybean oil, rapeseed oil, Malaysian palm oil, and CBOT soybean oil futures are presented. For example, the palm oil futures price closed at 9,510 yuan/ton during the day session with a 0.78% increase, and 9,570 yuan/ton during the night session with a 0.63% increase [2]. - **Trading Volume and Open Interest**: The trading volume and open interest of palm oil, soybean oil, and rapeseed oil futures, along with their changes, are provided. For instance, the trading volume of palm oil futures decreased by 9,332 lots to 48,758 lots, and the open interest decreased by 16,867 lots to 55,391 lots [2]. - **Spot Prices**: The spot prices and price changes of palm oil, soybean oil, and rapeseed oil are listed. For example, the spot price of 24 - degree palm oil in Guangdong is 9,540 yuan/ton, with a decrease of 80 yuan/ton [2]. - **Basis**: The basis of palm oil, soybean oil, and rapeseed oil in Guangdong and Guangxi regions is shown. For example, the basis of palm oil in Guangdong is 30 yuan/ton [2]. - **Price Spreads**: The spreads between different futures contracts, such as the spread between rapeseed oil and palm oil futures, soybean oil and palm oil futures, and the 9 - 1 spreads of palm oil, soybean oil, and rapeseed oil futures, are presented [2]. 3.2 Macro and Industry News - Malaysia's palm oil production from August 1 - 20 is estimated to have increased by 3.03% compared to the same period last month, with different growth rates in different regions [3]. - The US EPA announced the results of small refinery biofuel exemption applications, including the approval of 63 full - exemption and 77 partial - exemption applications, and the rejection of 28 applications. It also clarified the use of RIN credit and will return 1.39 billion gallons of RIN credit for 2023 and 2024 [6]. - The US EPA plans to release a supplementary proposal for the 2026 - 2027 Renewable Volume Obligations (RVO) [7]. - Pro Farmer predicts record - high average yields for US corn and soybeans in 2025, with corn yield at 182.7 bushels/acre and total production at 16.204 billion bushels, and soybean yield at 53.0 bushels/acre and total production at 4.246 billion bushels [7]. - Argentina's 2024/25 soybean planting area is estimated to be 18 million hectares, stable from last month's estimate and 8.4% higher than the previous year. The production is estimated to be 50.9 million tons, stable from last month's estimate and 5.6% higher than the previous year [7]. - In the 34th week (August 16 - 22), the actual soybean crushing volume of oil mills was 2.27 million tons, with an operating rate of 63.81%, 134,300 tons lower than the estimate [7]. 3.3 Trend Intensity - The trend intensity of palm oil is 1, and that of soybean oil is 0. The trend intensity ranges from - 2 to 2, indicating different levels of bullishness or bearishness [8].

Financial Data and Key Metrics Changes - The company reported a consolidated net loss of $90 million for the second quarter of 2025, with a loss per share of $1.14 and an EBITDA loss of $24 million [5][11] - Adjusted EBITDA for the quarter was $99 million, with an adjusted loss per share of $0.23 [11] - The negative mark to market impact on the RFS obligation was $89 million, and the unfavorable inventory valuation impact was $32 million [11] Business Line Data and Key Metrics Changes - In the Petroleum segment, total throughput was approximately 172,000 barrels per day, with a light product yield of 99% on crude oil processed [5] - Adjusted EBITDA for the Petroleum segment was $38 million, driven by increased Group 3 crack spreads, offset by higher RIN prices and lower throughput volumes [11] - The Fertilizer segment achieved an adjusted EBITDA of $67 million, supported by higher UAN and ammonia sales pricing and volumes [11] Market Data and Key Metrics Changes - Group 3 2-1-1 benchmark cracks averaged $24.02 per barrel for the second quarter, compared to $18.83 per barrel in the same period last year [6] - Average RIN prices for 2025 were approximately $1.11, an increase of over 70% from the prior year [6] - Nitrogen fertilizer prices for 2025 were higher for both UAN and ammonia compared to 2024 [10] Company Strategy and Development Direction - The company plans to focus on improving capture rates, reducing costs, and growing the business profitably [25] - The alkylation project at Wynnewood is expected to enhance the ability to produce premium gasoline, with completion anticipated in 2027 [19] - The company is cautiously optimistic about the refining sector's near and medium-term outlook, given low refined product inventories and steady demand [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the refining market, citing low inventories and steady demand for refined products [17][20] - The company is awaiting final regulations from the IRS regarding PTC benefits, which could positively impact the Renewables segment [9][21] - Management indicated that the energy transition is evolving, with a belief that gas and diesel will remain essential fuels for the foreseeable future [48] Other Important Information - The company ended the quarter with a consolidated cash balance of $596 million and total liquidity of approximately $759 million [15] - Significant cash uses included $189 million for capital and turnaround spending and a $70 million prepayment on the term loan [13] Q&A Session Summary Question: Impact of excess inventory on financials - Management acknowledged that excess inventory during turnaround seasons negatively impacted financial performance, estimating a 7% to 9% decline in capture rates due to timing of product sales [31][35] Question: 2026 CapEx and turnaround outlook - Management indicated that there are no major turnarounds planned for 2026, and guidance on capital spending will be provided later in the year [36] Question: Strategic focus for new leadership - Management emphasized the need for diversification and the potential for future acquisitions to mitigate reliance on a single market [40] Question: Dividend reinstatement considerations - Management expressed a desire to return to dividend payments as soon as possible, with ongoing discussions at the board level [48][51] Question: Small refinery exemptions outlook - Management discussed the ongoing challenges with small refinery exemptions and the potential for legal action if necessary, emphasizing the importance of these exemptions for rural refineries [54][56]

Report Industry Investment Rating No relevant content provided. Core View of the Report - The US EPA issued a proposed rule for the RFS from 2026 - 2027, which is unexpectedly bullish. The total demand for raw materials is expected to grow in the next two years [20]. - There is a price premium for North American domestic raw materials over overseas raw materials in producing renewable diesel. The premium is dynamic and may widen if the RIN price rises. The bottom of the US soybean oil price is relatively stable, but there is a risk of a 10% - 20% upward fluctuation in the long - term. The demand from small refineries is uncertain [20]. - Due to the increasing biomass diesel obligation and differential subsidies for domestic and foreign raw materials, North American soybean oil and rapeseed oil will be used for biomass diesel production, while overseas raw materials will be used in the food and oleochemical markets. The price of raw materials for biomass diesel is more elastic [21]. - The US is expected to increase domestic soybean crushing and reduce soybean exports without increasing the soybean planting area. This may affect China's soybean imports, and the CBOT soybean price will be supported [22]. Summary by Related Catalogs Policy Introduction - On June 13, 2025, the US EPA issued a proposed rule for the RFS from 2026 - 2027, which led to a sharp rise in US soybean oil prices. A virtual public hearing will be held on July 8, 2025, and an additional meeting may be held on July 9, 2025 [2]. - The policy aims to provide market certainty for producers, offer lower oil prices for consumers, support the US biofuel industry, and enhance energy security and employment [3]. - The main contents of the policy include setting strong growth targets for major renewable fuels, prioritizing the US by reducing the value of foreign renewable fuels and raw materials, and canceling electricity as a qualified renewable fuel to achieve the goal of canceling the EV mandate [3]. Policy Details - The EPA proposed to set the total RV0 for 2026 at 24.02 billion RINs, an almost 8% increase from 2025, and 24.46 billion RINs for 2027, a nearly 2% increase from the previous year [5]. - The obligated quantities of biomass diesel for 2026 and 2027 are set at 5.61 billion gallons and 5.86 billion gallons respectively, exceeding market expectations [6]. - The proposed policy will increase the production of US biomass diesel, raise the operating rate, and increase the demand for raw materials [6]. Impact on Raw Material Prices and Demand - North American domestic raw materials for renewable diesel have a premium of about 10 cents per pound (about $220 per ton) over overseas raw materials. The premium is dynamic and may widen if the RIN price rises. The US soybean oil price is more volatile, and there is a risk of a 10% - 20% upward fluctuation in the long - term. The demand from small refineries is uncertain [10]. - The increasing biomass diesel obligation and differential subsidies will lead to the use of North American soybean oil and rapeseed oil for biomass diesel production, while overseas raw materials will be used in the food and oleochemical markets. The price of raw materials for biomass diesel is higher than that in other industries [11]. - Compared with 2024, the total demand for biomass diesel in 2026 is flat, and it increases in 2027. The global demand for vegetable oil is expected to increase, with North America leading the growth [13][14]. - The US may increase domestic soybean crushing and reduce soybean exports without increasing the soybean planting area. The USDA expects the 2025/26 soybean crushing volume to be 2.49 billion bushels (67.76 million tons), a 2.8% increase year - on - year. The domestic soybean crushing capacity has increased, and there is a probability of further increase by 2030. This may affect China's soybean imports, and the CBOT soybean price will be supported [18][22].