(Sept 1): US soybean futures hit their highest level in almost three years after the Trump administration’s renewable fuel exemption announcement came in more bullish than expected for biofuel demand.
Crops including soybeans are a significant feedstock for renewable fuels such as biodiesel, making any announcements around their production highly influential on markets.
The US Environmental Protection Agency announced a total of 1.76 billion credits for the 2025 compliance year on Monday, the biggest amount of exemptions from mandates for small oil refineries since 2017. The credits reduce the volume of renewable fuels they were required to produce.
In a relief for farmers, who had feared a drop in demand for their crops ahead of the exemption announcement, the EPA surprised the market by reallocating the difference between the projected and actual exempted volumes for 2025 to the 2026 and 2027 mandates, shifting the lost biofuel demand forward.
“It’s a much more positive outcome; the market was bracing itself for this massive amount of small refinery exemptions,” said Susan Stroud, analyst and founder at No Bull Agriculture, adding that the net effect would effectively be minimal. “What they gave back for 2025 is actually being shoved back to 2026 or 2027, so the net effect is not really that big,” she added.
Soybean futures in Chicago jumped by as much as 1.2% on Tuesday following the announcement, hitting the highest since December 2023, before paring some of the gains. Soybean oil rose by more than 2.4% before dropping slightly.
Prices:
- Soybeans are up 1.2% to US$13.03 (RM52.59) a bushel as of 8.59am in London (4.59pm Malaysia).
- Soybean oil rose 2.4% to 72.82 US cents a pound.
- Wheat rose by 1.8% to US$7.88 a bushel, while corn was largely stable.
Uploaded by Arion Yeow