Summary
On October 13, EPA proposed adding back about 770M waived RINs. ADM (+3.5%), Bunge (+3.2%) and Darling (+3.3%) rallied, but Jan soybean oil fell 0.8%, so the gap to equities is open. Demand is strong: USDA sees 17.8B lb of soybean oil going to biofuel (+20%), and palm oil is tight. Row crops stay heavy, with USDA raising the soybean yield to 53.1 bu/ac (4.56B bu). Desk stance: bull, medium conviction, 1–2 week horizon.
Key numbers
- Waived RINs EPA would add back
- ~770M
- Soybean oil to biofuel, 2026/27
- 17.8B lb
- USDA soybean yield
- 53.1 bu/ac
- Reward to risk
- 2.4x
Waived RINs EPA would add back
proposed Oct 13; final action pending
Soybean oil to biofuel, 2026/27
+20%; 53% of US use
USDA soybean yield
4.56B bu crop; harvest 46% done
Reward to risk
long ZLF27 from 67.28¢/lb
EXHIBIT 1Price monitor
Source: Investing.com (daily closes and most last prices); Barchart (Dec 31, 2025 year-end settles).
EXHIBIT 2Year-to-date performance
Biofuel equities have outrun the feedstock: the 10-point gap is the trade.
Key drivers
- Supply: soybeans 4.56B bu, harvest 46% done; cotton 13.44MM bales, wheat 1.534B bu. A record 2.78B bu crush adds soybean oil; Malaysian palm stocks at a 10+ year high.
- Demand: 17.8B lb of soybean oil to biofuel in 2026/27 (+20%). China has bought ~15 of 25 mmt of soybeans, state buyers only. Wheat exports cut 25M bu to 750M.
- Positioning: funds net long ~99k contracts (16% of OI) vs. a 169k one-year high; ZLF27 sits between its 200-day (64.7¢) and 50-day (69.1¢) averages.
- Macro & policy: Brent $106, diesel $6.20/gal; the 10% China soybean tariff stays and the truce expires in November; the farm bill is stalled until after Nov 3.
EXHIBIT 3ZLF27 levels, ¢/lb
ZLF27 sits between its 200-day and 50-day averages; the stop sits at the 200-day.
Why the trade works
- Gap is open: ADM (+3.5%), Bunge (+3.2%) and Darling (+3.3%) rallied on EPA's proposal while Jan soybean oil fell 0.8%.
- Policy demand: a final rule near the ~770M-RIN proposal adds feedstock demand.
- Room to run: funds are net long ~99k contracts vs. a 169k one-year high.
Risks to the view
- Iran deal: if Hormuz reopens, oil can drop fast; Darling says fat prices stay high unless crude falls toward $50.
- Policy: EPA could finalize a smaller reallocation or grant more exemptions; imported UCO, tallow and canola oil still compete.
Catalysts ahead
The original document
Agriculture Analyst Brief, week of Oct 12 (PDF)
As written by the desk, in its own format.
Educational research, not investment advice. Prepared by student analysts of the Commodities and Shipping Club at Northeastern University from the sources cited above.
