Bean Oil Pressure Continues on Friday

Soybean futures are declining, driven by weakness in bean oil due to reports of the White House potentially addressing small refinery exemption backlogs and a subsequent fall in the RIN market; July 25 Soybeans are down 9 1/4 cents to $10.42 1/2. Export sales data revealed old crop bean sales of 146,034 MT, falling short of analyst expectations, while soybean meal sales exceeded expectations at 603,169 MT, the largest since October. A wetter weather pattern across key growing regions is also contributing to the downward pressure.

Analysis

Soybean futures are experiencing significant downward pressure, evidenced by midday losses of 9 to 11 cents, with the cmdtyView Cash Bean price falling 9 1/4 cents to $9.96 and Jul 25 Soybeans declining to $10.42 1/2. This weakness is primarily attributed to pressure on bean oil, which saw futures drop 165 points following reports that the White House is considering measures to address the backlog of small refinery exemptions, leading to a decline in the RIN market. Compounding the bearish sentiment, old crop bean export sales for the week totaled only 146,034 metric tons (MT), significantly below analyst estimates of 150,000 to 500,000 MT, marking a 15-week low and a 55.8% decrease compared to the same period last year. Mexico was a notable buyer of 52,200 MT. New crop sales of 32,000 MT fell within expectations. In contrast, soybean meal sales were robust, totaling 603,169 MT, well above the anticipated 150,000 to 450,000 MT range, with current marketing year sales of 424,649 MT representing the largest volume since October. The Philippines and Japan were significant buyers for the 2024/25 marketing year. Bean oil sales, at 19,542 MT, were within estimates and reached a 7-week high. Additionally, a wetter weather pattern forecasted for the Northern Plains to the Eastern Corn Belt is contributing to the negative price action. The overall market sentiment is moderately negative, reflecting these combined pressures.

Key Decisions for Investors

• Investors should monitor developments regarding White House policy on small refinery exemptions and evolving weather patterns, as these are key near-term price drivers for soybeans and soy oil.
• Consider the divergence between strong soybean meal demand, with sales significantly exceeding expectations, and the weakness in soybean and soy oil prices, which may present spread trading opportunities or indicate underlying strength in specific segments of the soy complex.
• Given the disappointing old crop export sales, pay close attention to future export reports for any signs of recovery in demand, particularly for new crop soybeans, to gauge potential shifts in market sentiment and price direction.