By Brian Harris, Global Risk Management Inc.

2021 has been one for the record books thus far in the soybean complex as the markets continue to move through a longer-term structural change. While the trajectory for the soybean and soybean meal markets has been lower since June on a solid U.S. crop and sluggish demand, the soybean oil market continues to “hold its own” with the advent of increased demand from the Renewable Diesel industry and sharply higher year over year prices in palm, canola and energy.

Soybean oil’s share of the crush is currently trading above 49% and is at the highest level that we have seen since 1998. This despite the fact that domestic crude oil stocks have actually increased counter-seasonally over the past few months.

While one would intuitively expect to see soybean oil prices begin to relax as we head into the heavy fall soybean crushing season with adequate supplies and favorable margins, outside influences will continue to play the heavier role in price direction. The largest wildcard in the intermediate term is what the EPA will finally come out with for 2021/2022 biodiesel mandates, whenever that finally happens!

Please feel free to call GRM anytime to discuss in depth.

September’21 NOPA Soybean Oil Stocks: stocks above average trade expectations and again rising contra-seasonally. This marked easily the highest stocks levels in the last nine years; implies that there will likely be another increase to the USDA 20/21 ending stocks estimate

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