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Jerry Gulke, president of the Gulke Group, said Friday’s technical action in soybean trading suggests that the Environmental Protection Agency’s proposed higher biomass-based diesel blending levels for 2026 may already be priced into soybean and soybean oil markets.
During the week:
Although November soybean futures closed higher for the week, they posted a bearish reversal during Friday trading. The contract approached its February 4 high of $10.75¾, rising to $10.74¼ before failing to hold and closing lower.
Gulke said this technical behavior suggests November soybeans may have already reached their high for the year and that the positive news about higher EPA blending levels has already been priced into the market.
He noted that when the market reached its yearly high in February, traders did not yet know the size of Brazil’s crop, which later kept increasing. Now, the market nearly repeated that move after positive EPA news.
Although the EPA proposal looks promising, Gulke said it remains only a proposal and has not yet become a final rule. He also emphasized that the details matter.
After reviewing the fine print, he said the agency is not banning foreign feedstocks for biodiesel and renewable diesel production, including used cooking oil from China, but is applying penalties to their use.
Gulke said relying only on soybeans to meet the new demand would be impossible, but the details indicate that many other feedstocks can also be used.
He added that California’s low-carbon fuel market favors used cooking oil over soybean oil because it has a lower carbon footprint and helps avoid reigniting the food-versus-fuel debate.
Gulke believes biofuel news alone is not enough to keep soybean or soybean oil prices rising, especially without major weather threats to crops and with the possibility of losing some soybean exports to China as the fall harvest approaches.
The next major market news is expected to be the USDA planted acreage report, but Gulke does not expect major changes in soybean acreage compared with March expectations.
Based on this view, he advises producers to hedge against downside risk in the soybean market. His firm sold an additional 10% to 15% of the new soybean crop on Friday and made its first sale for the 2026 crop.
He concluded that current prices represent the 2025 highs for November soybean futures, so some of the gains should be protected. If that view is wrong, he said it is still an excellent position from which to be wrong in the soybean market.
Source: AgWeb