Just in time for Thanksgiving, the U.S. Environmental Protection Agency boosted soybean futures Wednesday by raising 2017 biofuel mandates to record levels.
The soybean futures rally “is directly a function of the EPA announcement this morning, and you can really see that, coming back through the bean oil market here today, up by almost 21 cents,” says Dale Durchholz, senior market analyst at AgriVisor, in Bloomington, Ill.
January soybeans jumped 4 1/4 cents, closing at $10.34 1/4 on Wednesday, while December corn slid just 1/4 of a cent at $3.50 3/4.
Anticipated demand lifted the soybean complex when EPA raised quotas of renewable fuel mixed into U.S. gasoline and diesel to a record 19.28 billion gallons, including 15 billion gallons of ethanol, according to analysts.
“EPA really raised the mandate for advanced biofuels, which includes biodiesel, more aggressively” than was expected, according to Durchholz.
With roughly 25 percent of U.S. soybean oil production used for biodiesel, “an increase or positive surprise for biodiesel has huge ramifications in the bean oil market, which is where the (complex’s) lift came from,” says Durchholz.
Soybean oil futures prices have hit their highest level in two years, he adds. CBOT December soybean oil closed at $36.85, up 2 2/5 cents.
The boost from EPA’s announcement far outweighed the impact of low freight prices or farmers unloading cash soybeans, according to Durchholz.
Other analysts also pointed to exports and high domestic use as factors driving soybean prices higher.
“The soybean market has rallied sharply,” says Joe Vaclavik, president and founder of Standard Grain in Chicago. “Export demand is great and last month’s crush number was well above expectations,” he notes.
Larry Shonkwiler, of Advance Trading, in Bloomington, Ill., held a similar view.
The pace of soybean inspections for export through November 17th is up by 21 percent at 805 million bushels, and unshipped sales are nearly 30 percent higher compared to last year, he notes.