Grains and cotton end higher on Friday, with hogs mixed and cattle sharply lower.
Soybeans and Bean Oil Soar on EPA News
Soybeans were up 27 to 28 cents on Friday with soybean oil locked limit up on all of the contracts.
Alan Brugler, A&N Economics, says bean oil got support from a nearly $5 rally in crude oil but was mostly a reaction to the EPA’s proposed Renewable Volume Obligations, which were especially bullish for biomass based diesel.
The agency raising the levels 67% from 2025 to 5.61 billion gallons for 2026 and upping volumes to 5.86 billion gallons for 2027.
This was above the 5.25 billion gallons the industry recommended for 2026.
“Most of the growth in being used in the U.S. has been in the biofuels, not the exports. So this is positive for beans,” he says.
How High Will Soybean and Bean Oil Prices Climb?
Brugler says this will impact the new crop soybeans and he projects prices will have to move higher to factor the higher volumes in.
“Technically 52 and a half, 53 cents is the nearby target for bean oil. Obviously we could trade into the ‘60s or low if crude oil is high enough,” he explains.
He says this is more of a new crop story with the higher mandates not taking effect until 2026, but November soybeans could also rally as bean oil moves higher and with lower acreage for 2025-26.
However, Brugler says this will put a floor in new crop beans in the high nines.
“Our models say basically high nines to $12, $12.25 possible for next year’s beans based on this information and the S&Ds that we have at the moment,” he points out.
Corn Unimpressed with Ethanol Blending Mandates
Corn ended slightly higher getting some spillover support from soybeans and crude oil on Friday.
However, the overall reaction was muted to the EPA’s RVO levels for corn-based ethanol which were set at 15 billion gallons for 2026 and 2027.
Brugler says the problem with the corn market seems to be two-fold. Prices are trying to go low enough to spur export demand and there is just no weather threat to the crop yet.
Wheat futures saw nice gains on Friday following soybeans and with some short covering.
Cotton Under Performing
Cotton futures were up slightly with higher crude oil futures in reaction to the escalation of fighting between Iran and Israel.
However, Brugler says that market is under performing considering the big cuts USDA provided in the June WASDE on a U.S. and domestic basis.
USDA lowered old crop ending stocks by 400,000 bales and new crop carryover by 900,000 bales. Global ending stocks were also cut but the market failed to respond on Thursday and saw only a slightly higher close on Friday.
Cattle See “Healthy Correction”?
Cattle futures plunged again on Friday on follow through technical selling and spillover from the lower financial markets due to rising geopolitical tensions between Israel and Iran.
However, the market had already started correcting off the highs the previous two sessions, despite higher cash and cutouts.
Brugler thinks this a healthy correction in a bigger bull market.
Lean hog futures ended mixed with strength in the nearby contracts again and more contract highs in other months.
