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The Trump administration will finalize rules on biofuel blending by early March, reflecting a compromise between farm groups and major oil companies, Reuters reported Thursday. Blending quotas would be close to EPA’s initial proposal in June, which included a target of 5.61 billion gallons for bio-based diesel, up from 3.35 billion in 2025. EPA is now considering a range of 5.2 billion to 5.6 billion gallons, the report said, with the downward revision partly due to EPA’s plan to ditch a tax-credit penalty on imported biofuels, which would be a victory for Big Oil.
However, White House trade adviser Peter Navarro, in a guest column in The Hill newspaper, indicated that imported feedstocks would still see a penalty. He wrote that under the EPA’s Renewable Fuel Standard proposal, biofuels “made from domestic soybean oil receive full credit, while fuels derived from imported oils would receive only half credit – ending the practice of treating foreign and domestic inputs the same and shifting demand decisively toward U.S. crops and processors.”
Soybean oil futures surged on the prospect of a final proposal, with the March contract rising 199 points to 52.87 cents and hitting a four-week high. Meal futures fell on apparent oil/meal spreading, while March soybeans rose 10 1/2 cents to $10.53.
Still crushing it… U.S. soybean crush rose in December to the second-highest monthly level on record, while soyoil stocks rose to a 19-month high, according to the monthly NOPA report. NOPA members processed 224.991 million bu. of soybeans last month, up 4.1% from 216.041 million bushels in November and up 8.9% from the December 2024 crush of 206.604 million bushels.
Squeeze continues… USDA last month forecast total production costs for corn will rise 3% in 2026, with soybeans up 3.1%. In the Jan. 12 WASDE report, USDA put the average corn price for the current marketing year at $4.10 a bushel, up from $4 in its December estimate but down from $4.24 in 2024-25 and $4.55 in 2023-24. The average soybean price was estimated at $10.20, down from $10.50 in December, up from $10 in 2024-25 and down from $12.40 in 2023-24. A Reuters analysis based on USDA’s preliminary 2026 yield outlook and the agency’s cost-of-production estimates found farmers would need corn prices of $5.03 a bush and soybeans at $12.08 simply to break even, according to a Reuters analysis of USDA figures.
Slightly less gloomy… The overall Rural Mainstreet Index, based on a survey of rural bank CEOs in a 10-state region dependent on agriculture or energy, climbed to 52.0 in January, its highest reading since July 2023 and up from December’s 50.1. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. While a slight gain, more than one in three bankers, or 34.7%, indicated their local economy was currently in recession. Another 26.9% expect their local economy to experience recession conditions in the first half of 2026, said Creighton University’s Dr. Ernie Goss, who conducts the survey.
Oil futures retreat… Oil futures fell sharply Thursday, continuing to give back big gains seen earlier this week after President Donald Trump threatened strikes on Iran if the regime continued to kill protesters. The geopolitical risk premium began to quickly evaporate Wednesday after Trump said the “killing in Iran is stopping.” West Texas Intermediate crude, the U.S. benchmark, finished down 4.6% at $59.19 a barrel, while global benchmark Brent crude declined 4.2% to $63.76 a barrel.
Quotable… “It’s important to appreciate that this is an administration that’s quite unpredictable,” said Dan Ivascyn, chief investment officer of Pimco, which has $2.2 trillion in assets under management and is arguably the world’s most influential bond-investment firm, in an interview with the Financial Times published Thursday. “What are we going to do about that? We’re diversifying…We do think we’re in a multiyear period of some diversification away from U.S. assets.”