Soybeans Steady as Soy Oil Slumps on EPA Biofuel Delay

Soybeans are holding a slightly firmer tone despite pressure from sharply weaker soy oil, softer rapeseed and lower crude. Demand-led support from robust U.S. exports and only moderate crop ratings is offsetting the bearish impulse from the EPA’s biofuel compliance delay. Soy complex pricing has turned more two‑tiered in late August. Soy oil futures at the CBOT are under clear downward pressure, pulling global vegetable oil benchmarks like rapeseed and palm oil lower. At the same time, soymeal and soybeans themselves are resilient, helped by solid export flows – including fresh Chinese buying – and U.S. crop ratings that are easing but still far from stress levels. Physical FOB offers show modest recent declines from China and Ukraine, while India’s offers remain steady. Short term, the market is caught between improving oilseed supply prospects and still-healthy demand from crushers and importers.

Prices

Across the soy complex, current CBOT futures show a divergence: soy oil is correcting, soymeal is edging higher, and soybeans are marginally firmer along the forward curve.

• CBOT soy oil nearby Sep 2026 is last around 66.5 US-ct/lb, down about 0.6 ct or -0.9% on the day, with a similar 0.5–0.9% decline along the 2026/27 strip. The curve gently softens further out with Dec 2028 near 61.7 ct/lb, signalling weaker long‑term margin expectations.
• CBOT soymeal is modestly firmer: Sep 2026 trades near USD 321/t, up USD 0.9 (+0.3%), with deferred 2027 contracts drifting towards the mid‑330s USD/t, showing a mild upward slope.
• CBOT soybeans front positions are slightly higher: Sep 2026 around 1,218 US‑ct/bu and Nov 2026 about 1,225 ct/bu, each up by roughly 0.1–0.2%. Later months into 2027/28 edge only gradually higher, reflecting balanced fundamentals.
• Physical FOB markets in USD/mt (approx. converted to EUR at 1 USD ≈ 0.90 EUR) indicate broadly stable to slightly softer levels: U.S. No.2 soybeans near Washington D.C. around USD 0.63/kg (~EUR 567/t), Chinese yellow soybeans at about USD 0.74–0.76/kg (~EUR 666–684/t) and Ukrainian soybeans FOB Odesa around USD 0.36–0.39/kg (~EUR 324–351/t).

*Approximate EUR conversion for comparison only.

Supply & Demand

The latest market moves are driven by a combination of supply-side relief in oilseeds and steady demand for soy products.

• Rapeseed pressure from Canada: ICE Winnipeg canola collapsed over two sessions, with Nov futures losing nearly CAD 50/t to about CAD 770.6/t (~EUR 479/t). This harvest‑driven selloff is spilling into European rapeseed and weighing on the broader vegetable oil complex.
• EPA decision hits soy oil: The U.S. EPA has extended the deadline for refiners to prove compliance with biofuel blending mandates by 30–90 days. This effectively postpones near‑term biodiesel demand for RINs and soy oil, triggering the sharp pullback in CBOT soy oil futures and adding downside to rapeseed and palm oil.
• Crude oil as an additional headwind: A notable drop in crude oil, linked to reports of higher tanker traffic through the Strait of Hormuz and reduced supply fears, further undermines biofuel margins and feedstock demand for vegetable oils.

Despite these headwinds on the oil side, soybeans benefit from ongoing export demand.

• Robust U.S. exports: USDA export data for the week to 20 August show soybean export shipments at around 420,900 t, up 43% from the prior week and nearly 7% above the same week last year. Egypt, Indonesia and Italy were the leading destinations, while fresh Chinese purchases in recent days also support forward demand.
• Full‑season context: Cumulative exports in MY 2025/26 are reported at about 40.5 Mt, still 18% below last year’s level, underscoring that while weekly flows are strong, the marketing year remains behind and leaves some slack in the export balance.

Fundamentals

On the production side, U.S. crop ratings have softened but remain relatively comfortable for this stage of the season.

• Crop conditions: The latest USDA Crop Progress update for the week ending 23 August shows 60% of U.S. soybeans rated good to excellent, one point below the previous week and well under last year’s 67% at the same time. This confirms a gradual deterioration but no acute weather shock.
• Development pace: Around 91% of the crop has reached the pod‑setting stage and about 6% has started dropping leaves, indicating a crop largely past its most yield‑sensitive flowering phase.
• Weather outlook: Short‑term forecasts for the U.S. Midwest indicate a prevailing ridge pattern with near‑ to slightly below‑normal rainfall in parts of the Upper Midwest, but no widespread extreme heat. This suggests limited additional yield risk in the coming week, though localized dryness could cap top‑end yield potential.

In the product balance, diverging price action between soy oil and soymeal points to changing margin dynamics.

• Soy oil vs. soymeal: Soy oil weakness, driven by policy and energy markets, contrasts with firmer soymeal on resilient protein demand. This shifts the crush value composition slightly towards meal, which can sustain crusher incentives even as oil prices soften.
• Global vegoil competition: Malaysian palm oil futures fell by more than 1%, ending a five‑day rally, as the broader selloff in vegoils and crude filtered through. This narrows the price premium that soy oil can command and may limit recovery rallies in the short term.

3–6 Month Outlook & Trading View

Looking ahead into Q4 2026 and early 2027, the soy complex is set to be shaped by the interaction of good but not record U.S. supplies, South American planting prospects and the evolving policy backdrop in biofuels.

• Price direction: With U.S. soybeans rated 60% good/excellent and no immediate weather shock, base‑case expectations point to range‑bound to mildly softer CBOT soybean prices, especially if South America plants on time and area remains high.
• Vegoil risk: The EPA’s extended compliance window has introduced a near‑term ceiling for soy oil prices. Any reversal or tightening in mandates, or a rebound in crude, could quickly tighten vegoil balances again and lift the oil share of the crush.
• Demand watchpoints: Chinese and Middle Eastern buying – as illustrated by recent strong shipments to Egypt, Indonesia and Italy – remain critical. Any slowdown in Asia’s feed demand or substitution towards other meals would pressure soymeal and, by extension, the bean.

Trading recommendations (short to medium term)

• Crushers: Consider locking in a portion of soymeal sales against current slightly firmer futures while leaving some soy oil exposure open to benefit from potential policy‑ or energy‑driven rebounds.
• Importers: For physical buyers in the EU, MENA and Asia, use current stability in CBOT beans and slightly weaker FOB offers from the Black Sea and China to layer in Q4–Q1 coverage, but avoid over‑coverage given still‑ample global supply potential.
• Producers: U.S. and Ukrainian growers may hedge a share of expected 2026/27 production on current soybean and soymeal strength, while remaining flexible on vegoil pricing given high policy uncertainty.

3‑Day Directional Outlook (EUR‑based)

• CBOT soybeans (converted to EUR): Sideways to slightly higher as export demand and only moderate crop ratings offset pressure from weaker vegoils.
• CBOT soy oil (EUR‑equivalent): Mild downside bias, with further consolidation likely after the sharp policy‑driven selloff unless crude oil stabilizes.
• Euronext rapeseed (EUR/t): Down‑to‑sideways, still digesting the strong Canadian canola‑led correction, with partial support from meal strength.