Soybeans Push Higher Continues as Bean Oil Using Expanded Limits

Soybean futures are trading higher, driven by strength in soybean oil following the EPA's announcement of higher-than-expected biomass-based diesel targets for 2026 and 2027, setting a 5.61 billion gallon limit for 2026. The EPA is also considering cutting RIN credits in half for imported feedstocks. Managed money increased their net long position by 17,038 contracts, reaching 25,639 contracts as of June 10th, while the market awaits NOPA crush data with expectations of 193.52 million bushels crushed in May.

Analysis

Soybean futures are exhibiting notable strength, with nearby contracts gaining 25 to 28 cents on Friday and adding another 5 to 7 cents in Monday AM trading, largely propelled by a significant rally in soybean oil which rose 364 points. This upward momentum is significantly influenced by the Environmental Protection Agency's (EPA) recently released Renewable Volume Obligation (RVO) proposal, which set a 5.61 billion gallon limit for biomass-based diesel in 2026 (rising to 5.86 billion in 2027), figures that surpassed market expectations based on earlier rumors. Further supporting domestic feedstock demand, the EPA is also considering a reduction of RIN credits by half for imported feedstocks. Reflecting this positive sentiment, the Commitment of Traders report indicated that managed money increased their net long position by 17,038 contracts to 25,639 contracts as of June 10th. While soybean oil futures saw limit gains, pushing the July contract's weekly gain to 311 points, soymeal futures experienced a slight downturn, with July contracts losing $3.80 per ton over the week. Market participants are now anticipating the NOPA crush data, with consensus estimates around 193.52 million bushels for May. Current U.S. soybean export commitments are at 48.713 MMT, representing 97% of the USDA's forecast, slightly behind the typical 100% average sales pace for this time of year, although shipments are aligned with the normal pace at 90% of the full-year projection.

Key Decisions for Investors

• Given the bullish EPA RVO announcement and the increase in managed money net long positions, investors may consider the current market supportive for soybeans and soybean oil.
• Traders should closely monitor the upcoming NOPA crush data, as a figure meeting or exceeding the 193.52 million bushel expectation could provide further price support, while a miss could temper recent gains.
• While domestic factors are currently positive, the slightly lagging export sales pace compared to the historical average warrants observation, as sustained underperformance in exports could eventually weigh on the market.