Soybeans Rallies as RVO Proposal Pushes Bean Oil Up the Limit

Soybean futures rose sharply Friday following the EPA's announcement of higher-than-expected biomass-based diesel mandates beginning in 2026, with nearby contracts gaining 25 to 28 cents and July soybean oil hitting limit gains. The EPA proposed a 5.61 billion gallon limit for Biomass-based diesel in 2026 and 5.86 billion for 2027, exceeding prior rumors, while also aiming to cut RIN credits for imported feedstocks by half. Managed money net long positions increased by 17,038 contracts as of June 10th, reaching 25,639 contracts.

Analysis

The soybean market experienced significant support, with nearby contracts closing Friday with gains of 25 to 28 cents, primarily driven by the Environmental Protection Agency's (EPA) Renewable Volume Obligation (RVO) announcement. This rally pushed the July contract to a weekly gain of 12 1/2 cents, while the November contract rose 17 3/4 cents. The cmdtyView Cash Bean price increased by 25 3/4 cents to $10.20 1/2. In contrast, soymeal futures declined by $3.20 to $3.40 per ton. Soy oil was the standout performer, with most contracts hitting 3-cent limit gains, contributing to a weekly gain of 311 points for the July contract. The EPA's proposal for biomass-based diesel mandates of 5.61 billion gallons for 2026 and 5.86 billion for 2027 surpassed market expectations based on earlier rumors, and the agency is also looking to halve RIN credits for imported feedstocks. Concurrently, the Commitment of Traders report indicated a substantial increase in bullish sentiment, with managed money adding 17,038 contracts to their net long position, bringing the total to 25,639 contracts as of June 10th. Upcoming NOPA crush data, with an expected 193.52 million bushels for May, will provide further insight into domestic demand. Current export sales commitments stand at 48.713 MMT, representing 97% of the USDA forecast, slightly lagging the average sales pace, though shipments are on par with the normal pace at 90% of the full-year projection. Specific closing prices highlighted the gains: Jul 25 Soybeans at $10.69 3/4 (up 27 1/2 cents) and Nov 25 Soybeans at $10.54 3/4 (up 27 1/2 cents).

Key Decisions for Investors

• Investors should consider the bullish implications of the EPA's higher-than-anticipated RVO mandates for biomass-based diesel, which suggests increased future demand for soybean oil as a feedstock, potentially supporting soybean prices further.
• Monitor the upcoming NOPA crush data on Monday, as a strong figure could reinforce bullish sentiment, while a miss might temper the recent rally.
• Evaluate the impact of potentially halved RIN credits for imported feedstocks, as this could tighten domestic feedstock supply and further support prices, while also keeping an eye on export sales data which currently lags the historical average pace.