Soybean oil tumbles limit down overnight

A mixed tone greets the grain trade this morning, with wheat trending higher while soybeans are sharply lower. Soybean oil has dropped to its daily limit. On Tuesday afternoon, EPA Administrator Lee Zeldin indicated that the Renewable Volume Obligation (RVO) numbers for 2026 will be reviewed over the coming months and that a final decision is not expected anytime soon. There is concern that the 2026 mandate may fall well short of industry recommendations. With no firm agreement in place for 2025, the biofuel industry remains in the dark in the near term. This uncertainty has caused soybean oil futures to hit the limit down after being extremely overbought earlier in the week.

On day two of the Kansas City wheat tour, yield estimates in the southern part of the state were reported at 52.3 bushels per acre, up from 42.2 last year, and more closely aligned with the National Agricultural Statistics Service forecast. However, disease pressure and spring drought conditions have taken a toll, and final yields could be lower in the upcoming Kansas City production assessment. The production data from the tour is expected to be released shortly after midday.

Export sales this morning were strong for corn at 1.68 million metric tons, while soybean sales also exceeded expectations, particularly for the new crop. Saudi Arabia has announced a tender for 665,000 metric tons of wheat. With President Trump in the region, there is speculation that Saudi Arabia may opt to purchase U.S. wheat. This is helping to support domestic wheat values this morning. Additionally, index funds appear to be covering their short positions. Although this is typically a bearish season for wheat, the market may be setting up for a counter-seasonal rally if fund managers exit their heavily short positions.

The forecast continues to show rain, with additional moisture expected across the Central and Eastern Midwest next week. More soaking rains are also predicted for the Southern Plains and the Great Lakes region. Rain is currently falling as forecasted in the Dakotas and northern Nebraska, with overnight totals reaching up to 1.70 inches. The weather system is expected to linger in the Northern Plains through Saturday. While these forecasts were initially bearish for prices, the market appears to have already priced in much of this information. Meanwhile, dryness continues across northern Europe, and heat and dryness persist in the wheat-producing regions of eastern China. In Brazil, temperatures are expected to become abnormally hot over the next week, posing a threat to the safrinha corn crop.

Live and feeder cattle futures fell sharply yesterday following an outside-day lower pattern, creating a bearish tone in what has been a strong market. Monday's gap higher now appears to have been an exhaustion gap, as prices reversed and filled that gap during Tuesday’s session. Further technical liquidation may occur, as index funds have built record long positions over recent weeks. Wednesday’s cash markets showed some light trade in Nebraska, with dressed cattle priced at $358 to $360, up $2 to $4 from last week. In Iowa, prices were down $1 at $355. Asking prices in the South are quoted at $224 to $225, though those levels seem unlikely to be met this week based on current board action.

Midweek cattle slaughter is estimated at 339,000 head, down 10,000 from last week and 23,000 below the same time last year. Boxed beef values were mixed on Wednesday. Choice cuts dropped $0.74 to $349.36, while select cuts gained $1.38 to reach $355.25. The sharp decline in live cattle futures has put the June contract in focus, with support expected between $208 and $211. A break below this range could trigger more aggressive selling from index funds.