Soybean oil prices dropped this week due to uncertainty around biofuel-blending quotas, marking the worst week since October. The EPA proposed increased targets for biofuel and biomass-based diesel in 2025 and further restrictions on imported biofuels. White House is not expected to finalize 2026 quotas by year-end, calling for an increase in RINs to 7.12 billion in 2026.

Palm oil stocks are dwindling as Indonesia seizes land in palm oil producing regions, lifting its biodiesel blending mandate to 40%. Sunflower oil stocks are also tight due to lower production estimates in the EU and Black Sea. Rising blending rates in Indonesia, Brazil, and Malaysia make soybean oil more appealing. Argentina’s soybean sales to China will limit crushing.

Long-term trade strategy for soybean oil futures involves buying 1 July ’26 54 call, selling 1 July ’26 59 call, selling 1 July ’26 50 put, and buying 1 July ’26 45 put. This trade aims for soybean oil to reach 64.00-66.00 cents. By entering this trade, you collect a credit of 0.54 or $324, in addition to any gains from a rally in soybean oil.

For more information on the commodity markets or to open an account, please use the link to join the email list provided in the article. The writer is a broker at Walsh Trading, Inc., a registered Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member. Futures and options trading involves substantial risk and may not be suitable for all investors.

Read more at Barchart: Is Soybean Oil Getting Ready For a Major Move?