USDA makes some significant changes to its U.S. soybean oil demand forecasts – Brown

OILSEEDS AND BIOFUELS

The U.S. Department of Agriculture on Friday made some significant changes to its 2025-26 U.S. soybean oil demand forecasts, which begin Oct. 1. The agency cited recent blending requirements as well as tax breaks and restrictions on foreign feedstock imports.

U.S. soybean oil consumption for biofuels is forecast to reach a record 15.5 billion pounds in 2025-26, up 23% from the three-year average and 12% from the USDA’s June estimate. The department has cut exports in 2025-26 to meet growing domestic demand.

U.S. Soybean Oil Used to Make Biofuels

New data show that biofuels will account for more than half of U.S. soybean oil consumption next year for the first time ever, at about 53%.

That would put U.S. soybean crush in 2025-26 at a new record of 2.54 billion bushels. That would account for 58% of the total domestic production cut, the highest in 18 years, further undermining exports.

The U.S. Department of Agriculture (USDA) on Friday increased U.S. soybean exports for the 2024-25 crop year but cut them by 4% for the 2025-26 crop year. New crop soybean exports are now estimated at 1.745 billion bushels, the lowest July total in 11 years, according to USDA data.

As of July 3, new crop sales were just 3.9% of the new target. That’s the second-worst total in 25 years and only slightly better than a year ago. China has not yet ordered anything for 2025-26, its latest foray into the U.S. soybean market since 2005.

FUNDS REMAIN BEARISH

The soybean market’s weakness has attracted speculators, who in the week ended July 8 took their first net short position in three months in soybean futures and options on the Chicago Mercantile Exchange (CBOT). The net short position is small, at just 6,216 contracts.

Money managers pared their net short positions in CBOT corn futures and options, which stood at about 200,000 contracts on July 8. It was just their fourth week as net buyers in the last 20 years.

US grain and oilseed stock markets performed modestly in the week ending July 8. However, their net short positions in wheat on the CBOT fell to an eight-month low of 55,594 futures and options contracts, half the level of two months ago.

Speculators remain broadly bearish on grains and oilseeds, but far less so than they were a year ago.

Karen Brown is a Reuters market analyst. The views expressed above are her own.

Tags: soybean oil, USA, biofuel