Afternoon Soybeans: Crush margins readjusting.

The soybean market managed to separate itself from the bean oil meltdown today and posted a reversal higher as we look to stabilize.  It has been a roller coaster week for beans where the market made a good trade and broke out above the November highs but could not sustain the move, in large part because of bean oil, and failed.  January beans settled almost 9 cents higher on the day while the new crop November gained 8 cents.  For the week, beans gained 2 cents although we also stranded 40 cents worth of trade on the break off the highs.  The new crop bean/corn ratio bounced back in beans favor to recoup most of yesterday's flush, settling at 2.30%.

In the product trade, soybean oil gapped lower following yesterday's limit down performance and settled more than 2 cents or 3.2% lower a six-week settlement low. The selling in bean oil was concentrated on the front end of the curve where much of the length resides in this inverted market. Bean oil is a heavily long market from a fund and spec position standpoint, and with the wrong piece of news in the headlines yesterday (disappointing EPA mandate volumes), it has triggered a mad rush for the exits where the door is quite narrow. The sharp break in bean oil and the oil share spread has supported a meal rally and today meal added another $2.5 to establish a 9-week settlement high.

Board crush margins continue to be squeezed giving up 27 cents today to a still robust $2.12/bushel margin. Central IL spot cash crush margins have fallen even more dramatically and are now showing $1.85/bushel, down from well over $3.

There were no new bean oil deliveries against the December contract, there were 13 meal deliveries put out and stopped by Marex.

The EPA proposal to increase advanced biofuel mandates which covers biodiesel/renewable diesel and sustainable aviation fuel among other things for the years 2023-2025 was not as large as hoped for. Put another way, the renewable diesel industry expansion and growth plans were not fully represented by the mandated volumes and instead is advancing more government support for electric vehicles. That triggered the selling yesterday in bean oil which has carried into today. The EPA's proposal will now be open for public comment and may potentially be revised before a final ruling which is scheduled for mid-June.

Argentina's weather forecast today looks mostly dry through the first half of next week with rising temps reaching above 90 with some 100-degree highs later this weekend and into next week. Argentina will see weak weather systems increase in the second week of the outlook increasing rain frequency, although initial amounts will be light. The BAGE sees Argentina's soy planting at 29.1% complete, up 9.6% on the week but lagging 17.2% behind last year's pace of 48.2% and the 5 year average of 50.2%. The exchange says over 30% of the planted beans are in critical condition in the main producing region of the country due to a lack of water and high temps in recent weeks. Brazil will continue to receive routinely occurring rainfall that will support normal crop development in much of the nation during the next two weeks.

Stats Canada Principal Field Crop Production shows canola output at 18.2 mmt vs. 19.2 mmt expected and down from 19.1 mmt seen last month. Soybean production was 6.5 mmt in line with expectations and unchanged from last month.

Elsewhere in the news, Argentina's renewed 'soy dollar' program produced 416 tmt of new producer sales of soybeans on 12/1. Net sales since the program restarted have reached 1.571 mmt.

Brazil's National Energy Policy Council announced they will keep the B10 biodiesel blend rate in place until March when it will rise to 15%. The rate was scheduled to increase to 14% starting in January and then to 15% in March. The new Brazilian administration may push to bring back the January scheduled increase. The Brazilian Association of Biodiesel Producers estimate that the delay would trim biodiesel production in the first quarter by 600 million liters.

Soybean Basis:
Location Spot
US Gulf off 12 to +128
Sioux City, IA steady +15f
Mankato, MN steady +30f
Decatur, IL steady +25f
Claypool, IN steady +35f
Columbus, OH steady -5f