EU Soybeans: German Output Surges as ILUC Risk Casts a Shadow

Germany’s soybean sector is set for a record harvest in 2026, but overall EU-27 production is expected to edge lower, and looming EU ILUC regulation is emerging as a key medium‑term risk rather than a current price driver. International prices remain relatively range‑bound, with CBOT soybeans hovering around €10–10.5/bu and physical basis doing most of the work. The European soybean complex is at an inflection point. EU-27 output for 2026/27 is forecast just under 2.8 million tonnes, about 1% below last year, as a sharp 15% decline in Italian production outweighs moderate gains in France and strong growth in Germany. At the same time, industry groups are warning that the planned classification of soy as a high ILUC‑risk feedstock could undermine Europe’s protein strategy and deter on‑farm investment. Global futures remain subdued on broadly adequate supplies, but the policy overhang in Europe is becoming a strategic concern for crushers, feed manufacturers and originators.

Prices

International soybean futures are trading sideways to slightly softer. November 2026 CBOT soybeans were recently around 1,140 cents/bu, implying roughly €10.0–10.3/bu at current FX, with new‑crop contracts a touch lower than earlier in June as weather in the U.S. Midwest remains mostly favourable and acreage expectations are adequate.

Physical offers in key origins show a stable to mildly firmer pattern in EUR terms. Using an approximate 1.07 USD/EUR rate, benchmark FOB/port values translate as follows:

Overall, EUR‑denominated soybean values are broadly steady, with modest origin‑specific moves driven more by local logistics and quality premiums than by a strong directional move in global benchmarks.

Supply & Demand

EU-27 soybean production for 2026/27 is expected just under 2.8 million tonnes, around 1% less than last season. The decline is driven primarily by Italy, where output is forecast to fall 15% to 899,000 tonnes, the lowest level in five years, reflecting weaker area and yield prospects. France, the second‑largest producer, is projected to increase its crop by 4% to 408,000 tonnes, while several smaller producers also see incremental gains.

Germany stands out as the key growth story. National soybean output is forecast to rise 21% to 159,000 tonnes, setting a new record. This expansion, though still modest in absolute volume, signals structurally rising interest in domestic protein crops and a desire to cut reliance on imported feed proteins. Over the past decade, total EU soybean production has tripled, underscoring a strong long‑term upward trend despite this year’s small setback.

Weather conditions in major EU soybean regions (Italy, France, Germany) are currently mixed but not extreme. Short‑term forecasts point to seasonally warm temperatures with scattered showers across central Europe and northern Italy, supporting crop development for now, albeit with localised concerns about moisture deficits in parts of the Po Valley.

Fundamentals & Policy

The dominant new fundamental driver for the EU soybean market is regulatory rather than agronomic. The European Commission has proposed classifying soybeans as a high indirect land‑use change (ILUC) risk feedstock under the Renewable Energy Directive’s delegated acts. This would restrict their eligibility in certain biofuel pathways and could indirectly affect demand for soy oil and associated crush margins.

European grower and industry bodies, including UFOP and a broader oilseed and feed coalition, are pushing back strongly. They argue that an undifferentiated high‑ILUC label for soy would penalise sustainable EU and North American production, reduce incentives for further EU protein crop expansion, and conflict with the bloc’s own protein strategy. The debate injects policy uncertainty into forward investment decisions in crushing, logistics and on‑farm acreage.

In the short run, these regulatory discussions have limited impact on spot pricing, which remains driven by global supply, Chinese demand and currency moves. However, the ILUC file is already influencing term contracting, with some buyers and sellers cautious about long‑dated commitments for soy‑based biodiesel supply chains until the final scope and timing of the delegated act are clearer.

Outlook & Trading Strategy

Near‑term, global soybean prices are likely to stay range‑bound as markets weigh adequate old‑crop stocks against weather and acreage in the U.S. and South America. CBOT futures around €10/bu signal neither acute shortage nor surplus, but volatility could pick up on any U.S. weather scare or policy headline from Brussels.

Trading recommendations (1–3 months)

• EU crushers/feed buyers: Use current stable EUR‑denominated prices to extend coverage modestly into Q4 2026, but avoid over‑lengthy commitments in soy oil tied to biofuel mandates until ILUC rules are final.
• EU growers: The record German crop and decade‑long EU growth trend support continued soybean inclusion in rotations. However, factor potential ILUC‑driven demand shifts into medium‑term acreage planning, especially for soy destined for energy markets.
• Importers/originators into EU: Maintain diversified origin portfolios (EU, US, South America, Black Sea) to manage regulatory and sustainability‑compliance risks, while watching premiums for certified low‑deforestation and non‑GMO lots.

3‑day directional price view (EUR)

• CBOT soybeans (nearest liquid contract, in EUR/bu): Neutral to slightly bearish bias as long as U.S. weather remains benign and no major demand shock emerges.
• EU‑delivered soymeal (derived from futures, in EUR/tonne): Broadly stable; minor downside risk if futures ease and freight/logistics remain smooth.
• Non‑GMO Ukrainian soybeans (CPT Odesa, in EUR/kg): Narrow, range‑bound trade expected around current levels, with basis moves driven mainly by Black Sea logistics and local currency swings.