Soybean oil surges after the EPA fully reallocates 1.76 billion RINs, while worsening US crop conditions and unresolved Black Sea risks keep underlying support beneath corn and wheat.
Agricultural markets start Tuesday, 1 September, with a mixed but fundamentally supportive tone. Soybeans and soybean oil lead the upside following a favorable US biofuel-policy decision, while corn consolidates near new contract highs and wheat remains supported by constrained Black Sea flows despite improving supply prospects from Australia and a rapidly advancing US spring wheat harvest.
EPA Decision Reverses the Pressure on Soybean Oil
The strongest early catalyst comes from US biofuel policy. The EPA granted 18 small refinery exemptions for 2025, another 11 partial exemptions and denied three, covering 1.76 billion RINs, but crucially announced that 100% of the difference between projected and actual exempt volumes will be reallocated into 2026 and 2027 renewable volume obligations. That reallocation protects future mandated biofuel demand and has pushed soybean oil sharply higher, turning what had recently been a major bearish factor into direct support for the broader soybean complex.
Soybean Oil and Crush Economics Strengthen
The biofuel reaction is visible across processing economics. October soybean oil jumped 121 points to 72.04, reaching a six-week high and filling a gap from late July, while D4 RIN values surged to nearly $2.10 from an August low just below $1.80. Crush margins improved another $0.05 1/2/bu to $2.42/bu, with soybean oil’s share of product value recovering to 51.7%. Stronger oil values and improved crush economics increase processor support for soybeans and strengthen the bullish demand side of the balance.
US Soybean Conditions Fall as Chinese Demand Continues
US soybean conditions deteriorated by another 2 percentage points to 58% good to excellent, with composite ratings falling to their lowest level of the crop cycle and slightly below the historical average. Updated ratings imply an average yield of 52.6 bpa and production of 4.515 billion bushels, 15 million below last week and just below the USDA forecast of 4.519 billion. At the same time, another 136,000 MT of soybeans was sold to China for 2026/27, reinforcing the risk that lower yields could quickly tighten the balance when export demand remains strong.
Hot, Dry Finishing Weather Keeps Yield Risk Elevated
Weather continues to add support to both soybeans and corn. Rain is expected to favor the northern Midwest and Great Lakes this week, but southern areas remain hot and dry, pushing crops toward maturity at the potential expense of yield. Much of central and western Europe is also returning to a hot and dry pattern, while drought conditions in southern Ukraine are deepening, keeping weather risk embedded in both row-crop and wheat markets.
Corn Supply Expectations Continue to Tighten
US corn conditions remained at 57% good to excellent, but the internal composition weakened as one percentage point shifted from excellent to good and overall ratings remained at a new seasonal low below the historical average. Updated ratings imply an average yield of 179.6 bpa and production of 15.914 billion bushels, down 39 million bushels from last week and 99 million below the USDA forecast of 16.013 billion. Expectations for lower US and EU production alongside potentially higher usage continue to tighten the global stocks outlook and support corn despite Tuesday’s early consolidation.
Record Fund Length Adds Momentum — and Risk — to Corn
Speculative positioning remains extreme. Managed money is estimated to hold a record-large corn long position of just over 445,000 contracts, while open interest increased by another 15,500 contracts in Monday’s trade. Heavy fund participation has helped drive corn to repeated contract highs, but it also increases vulnerability to abrupt liquidation if crop expectations improve or demand fails to justify the current tightening narrative.
Black Sea Wheat Risk Remains Despite Corridor Efforts
Geopolitical uncertainty continues to underpin wheat. Turkey has pushed for a Black Sea shipping corridor to restore grain flows, but Russia’s foreign ministry rejected a moratorium on attacks, limiting confidence that shipping conditions will normalize quickly. Russia is increasingly seeking alternative routes, requesting capacity for as much as 5 MMT of wheat exports through the Baltic Sea, compared with only 1 MMT last year, highlighting the continuing constraints on traditional Black Sea channels.
Larger Australian Supply and Rapid US Harvest Cap Wheat Upside
Wheat also faces several countervailing supply factors. Following recent rainfall, Australia’s 2026/27 wheat production forecast was increased by 3 MMT to 29.9 MMT, although that would still be 17% below last year’s harvest. Kazakhstan’s 2025/26 wheat exports are expected to rise 16% year over year to 8.3 MMT, while the US spring wheat harvest has advanced to 77% complete, ahead of both last year’s 69% pace and the five-year average of 68%. These developments cap part of the Black Sea risk premium and keep wheat vulnerable to two-sided trade.
Higher Energy Prices Support the Agricultural Complex, but the Dollar Pushes Back
Macro conditions are mixed. October WTI crude is up $1.90/barrel at $87.65, reaching a three-month high, while gasoline and heating oil have also advanced, strengthening the energy linkage for soybean oil and biofuels. The US dollar, however, is moderately higher and US equities are lower, providing some resistance to agricultural commodity strength.
Wheat Futures
Wheat starts Tuesday in mixed two-sided trade, with Dec ’26 Chicago wheat up $0.02 at $7.76/bu, Dec ’26 Kansas City wheat down $0.01 at $8.37/bu, and Dec ’26 Minneapolis wheat up $0.01 at $7.64/bu. Continued Black Sea uncertainty and Russia’s search for alternative export routes provide underlying support, while the larger Australian crop forecast and rapid US spring wheat harvest limit the upside.
Corn Futures
Corn is consolidating after another overnight contract high, with Dec ’26 corn down $0.03 at $5.35/bu at the start of the session. The market remains supported by an implied US crop of 15.914 billion bushels, below the current USDA forecast, and expectations for tighter US and global stocks, although record speculative length creates an increasing risk of profit-taking.
Soybean Futures
Soybeans are leading the grain complex higher, with Nov ’26 soybeans up $0.08 at $12.96/bu, after trading above $13 for the first time and reaching a new contract high for a fifth consecutive session. Oct ’26 soybean meal is down $0.40 at $338.00, while Oct ’26 soybean oil is up 121 points at 72.04. Full reallocation of the 1.76 billion exempted RINs, weaker US crop ratings, improved crush margins and continued Chinese purchases are providing strong support, while the market remains increasingly sensitive to any further deterioration in US yield prospects.