Energy Markets Extend Gains, Helping Soybean Oil

GENERAL COMMENTS:

Further escalations of both the wars in Iran and the Black Sea region with more expected to be the path forward inspired additional gains in energy markets with crude oil trying to break up out of a bull flag while diesel continues to lead the way higher. The August ULSD contract set new contract highs again overnight, coming up against April/May resistance on the nearby continuous chart at $4.20/gallon (with the August high overnight of $4.1110/gallon). It’s worth noting the peak for the continuous nearby diesel contract set in early April was $4.6129/gallon. With extensive damage being done to refineries during both wars, which is very difficult to recover from, the situation is taking a serious turn. The resulting rally has helped soybean oil challenge this week’s high with a test of contract highs looking quite likely over time. That helped canola recover some of Thursday’s losses and it is now within $19/mt of contract highs. Row-crop prices are stable despite Trump’s suggestion China may have interfered with the 2020 election with traders clearly not concerned about it causing any trade friction. Weather outlooks remain the same with dryness a potential yield reducer in both the U.S. Corn Belt and Europe. The Eastern Corn Belt is still expected to see some relief from scattered rainfall.    

OUTSIDE MARKETS:

Treasury markets are higher in what appears to be a flight to safety as equity markets take a hit over concerns about the new Chinese AI tool that may make U.S. valuations too rich. Profits being taken in stocks with those funds flowing into the safety of Treasuries would make sense. Normally price pressure would be seen from the jump in energy prices, causing inflation concerns. The market has pushed back the first quarter-point rate increase to the October meeting followed by a pause. The U.S. 10-year note is at 4.52% after reaching 4.69% as a high in May.

The U.S. dollar is quietly higher despite the slight reduction in interest rates with strong energy prices likely helping. The September U.S. dollar is .086 higher at 100.655.

Equity markets are selling off, led by the tech-heavy Nasdaq due to concerns over cheap competition from China.

Energy markets are higher as discussed in the general comments. On Tuesday, the August crude oil contract came very close to filling the gap down from June 15 with it taking a rally to $81.68/barrel to do that with the high being $81.27. Traders may yet try to push prices up to make sure the gap is filled with the high on the day being $81.07/barrel so far. August crude oil is $2.05/barrel higher at $81.00. August ultra-low sulfur diesel is $.0727/gallon higher at $4.1034.

The September Canadian Dollar is up .00060 at $.71430 while the Brazilian real is down .00045 at .19490. August gold is up $3.80/ounce at $3995.90.

OILSEEDS:

Canola is higher with gains in soybean oil and diesel markets helping the market to shrug off Thursday’s weak close. A push into a new high for the week appeared to run into profit-taking just under $800/mt, with prices ending lower on the day. Such a reversal is a caution sign but not much more considering the serious situation facing global diesel supplies. It is a very good time to have had developments in renewable diesel versus biodiesel where the former can have canola oil providing up to 100% of the fuel content and perform exactly the same. November canola is $5.50 higher at $789.00/mt.

European rapeseed is quietly higher after retreating from another 19-month (and new contract) high Thursday. The late 2024 high was only 2.25 euros above the overnight high so that may have triggered some profit-taking. Should that level be surpassed, it would mark the highest price seen since early 2023. November rapeseed is .50 euro higher at 545.75 euros/mt.

Palm oil ended the week barely lower as slow exports continue to be a wet blanket. September palm oil is .20% lower. 

Soybean oil is higher as discussed in the general comments. The impact of tight diesel supplies was clearly displayed in the bullish June NOPA soybean crush report Wednesday. Soybean oil stocks came in below expectations at 1.5 billion pounds when 1.65 billion were expected despite 10 mb more soybeans being crushed than anticipated. The resulting firm close did keep the positive technical picture intact. As mentioned, the gap higher from the start of trading on July 8 looks more like a breakaway gap all the time (suggesting higher prices ahead). 

Soybeans are quietly higher in what appears to be volatile consolidation at contract highs, a moral victory for the bulls. That has left a bull pennant formation, suggesting a leg up into new highs. A return to more normal export demand from China with few excess supplies available to accommodate would be a driving fundamental support. The June NOPA soybean crush report highlighted the competition for supplies with a record being set for the month. 214.34 million bushels (mb) of soybeans were crushed, roughly 10 mb more than the average estimate, demonstrating the impact the record crush margins this spring are having.

WHEAT:

Wheat markets are higher with Kansas leading the way again due to its similarities to Russian wheat quality (and competition in the export market). An interesting bull flag has formed with Wednesday’s limit-up move, suggesting higher prices to come. With the Black Sea area expected to supply almost 30% of the global wheat exports and 12% of the corn, shutting shipments off due to the war has serious implication.

CORN:

Corn is mixed following a volatile week as traders tried to push through resistance at $4.70/bushel and the 100-day moving average with no success (yet anyway). For more on the technical picture, see Thursday’s blog at https://www.dtnpf.com/agriculture/web/ag/blogs/canada-markets/blog-post/2026/07/16/december-corn-chart-provides-wealth. Fighting in the Black Sea region reached the most severe since the conflict started, leaving global corn export supplies at risk at a time when European import demand will surely rise. The European corn market is quietly higher with November European corn being 1.25 euro/mt higher at $245.00 euro/mt after reaching 252.00 euros on Thursday.

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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