Soybeans Holding Gains on Friday with Bean Oil Strength Leading the Charge

Soybean prices are broadly higher today, with futures up 5-6.5 cents and soy oil significantly gaining, even as soymeal dips. This short-term strength emerges despite robust supply signals, including higher domestic pod counts from the ProFarmer Crop Tour and an upward revision in 2025/26 global production and stock estimates. However, new crop export sales are notably lagging last year, especially without Chinese participation, and the EPA's widespread granting of refinery exemptions could temper future demand for soy oil in biofuel production.

Analysis

The soybean market is exhibiting a disconnect between current price action and underlying fundamental signals. While futures prices posted modest gains of 5 to 6.5 cents, driven by a significant rally in soy oil, the broader outlook is tempered by bearish supply and demand indicators. On the supply side, the ProFarmer Crop Tour revealed exceptionally strong potential yields, with pod counts in Iowa and Minnesota exceeding their 3-year averages by 12.9% and 19.9%, respectively. This domestic abundance is complemented by a global outlook from the International Grains Council, which increased its 2025/26 world production and stocks estimates by 2 MMT each. On the demand side, new crop export sales are lagging significantly, down 22.4% from last year without any participation from China, while old crop commitments are tracking behind the 5-year average pace. Furthermore, the EPA's decision to grant a large number of Small Refinery Exemptions threatens to reduce future domestic demand for soy oil in biofuel production, creating a significant headwind for the soy complex.

Key Decisions for Investors

• Investors should be cautious of the current price strength, as it contradicts strong supply signals from both the ProFarmer tour and global production forecasts.
• The 22.4% year-over-year decline in new crop export sales, particularly the absence of Chinese buying, represents a primary bearish risk that could cap future price rallies.
• The granting of numerous Small Refinery Exemptions by the EPA is a negative catalyst for soy oil demand, warranting a review of positions exposed to the soybean crush spread.