Higher crush forecasts and rising soy oil demand reshape 2026/27 price prospects, though profit margins remain tight

By Jacquie Holland, ASA Economist

USDA’s forecasts for both domestic and international soybean production and consumption for both the current 2025/26 and upcoming 2026/27 marketing year sent soy prices headed in one direction on Tuesday: higher.

USDA published its first look at 2026/27 marketing year production, supply and demand estimates in the May 2026 World Agricultural Supply and Demand Estimates (WASDE) report Tuesday, while also revising 2025/26 estimates. It was a bullish report for soybean prices, fueled primarily by growing domestic and global usage forecasts.

The new marketing year estimates were welcomed warmly by the markets, as new crop November 2026 soybean futures prices surged to a three-year high above the $12/bu. benchmark following the report’s release. The contract ended Tuesday’s trading session $0.09/bu. (0.8%) higher at $12.0375/bu., aided in large part by growing global consumption of vegetable oils.

Old crop futures prices for soybeans also saw a boost thanks to rising crush forecasts. July 2026 soybean futures prices climbed to a two-month high of $12.2675/bu. Following WASDE’s release, closing Tuesday’s trading session $0.1225/bu. (1%) higher.

A rally in the energy markets also lent strength to both old and new crop futures prices for the soy complex following WASDE’s publication. The energy market spillover strength from Persian Gulf tensions will likely play a key role in production dynamics for the soy industry in the months ahead.

USDA expects high crush volumes will continue to support soybean prices, projecting 2026/27 average farm prices at $11.40/bu. The same sentiment prompted USDA to also increase 2025/26 average farm prices by a dime from last month to $10.40/bu.

The higher prices will reduce market losses for growers in both the 2025/26 and 2026/27 marketing years but are not high enough to completely offset rapid increases in input costs. As a result, profit margins are likely  in the red for soybean growers for another year.

Old crop revisions CRUSH it

USDA lowered 2025/26 U.S. export volumes by 10 million bushels, dropping the total to a 1.53 billion bushels. It is the smallest marketing year soybean export volume since the 2012/13 marketing year, which saw reduced shipments due to an historic drought.

USDA offset the lower export usage rate by adding 20 million bushels to 2025/26 U.S. soybean crush forecasts, bringing the current crush rate to 2.63 billion bushels. Across the Heartland, crush margins have hit multi-year year highs over the past month, with the Chicago board crush notching a new record high May 5. The rising margins and rapid consumption of soy products are the driver of the larger crush estimate.

2025/26 soybean oil production increased 345 million pounds to 30.675 billion pounds. The added supplies will increase consumption by biomass-based diesel by 200 million pounds, bringing the marketing year total to 14.2 billion pounds. Consumption of soybean oil for food, feed and other industrial uses rose 130 million pounds to 15.48 billion pounds.

While 2025/26 soybean oil ending stocks grew 15 million pounds, the rapid growth in usage more than offset the additional supplies. Rising consumption forecasts prompted USDA to raise 2025/26 season average soybean oil prices by $0.04/lb. to $0.63/lb.

Similarly, 2025/26 soymeal production was revised 750,000 short tons higher to 62.627 million short tons. The additional soymeal stocks are expected to be completely consumed by a 400,000-short-ton increase in soymeal exports and a 350,000-short-ton increase in domestic consumption, bringing those marketing year totals to 19.8 million and 43.575 million short tons, respectively.

With usage rates trending hotter for soymeal, in addition to soybean oil, USDA added $5/ton to season average soymeal prices, bringing the 2025/26 total to $315/ton.

Even as export volumes hover at 13-year lows, soybean prices are increasingly gaining strength from rising demand for soybean oil and soymeal end products. USDA expects demand for these co-products will be a central theme to new crop 2026/27 pricing dynamics.

New crop forecasts

Assuming March 31 Prospective Planting estimates of 84.7 million acres of soybeans for 2026 and a trendline yield of 53.0 bushels per acre (bpa), USDA forecasts 2026 U.S. soybean production at 4.435 billion bushels. If realized, it will be the second largest crop harvested by U.S. soybean producers, trailing only 2021’s record haul of 4.464 billion bushels.

But 2025/26 trend of rising domestic crush volumes and end product usage will continue into the new crop 2026/27 marketing year. A 120-million-bushel increase in crush volumes and 100 million added bushels to revived export demand will tighten 2026/27 ending stocks to 310 million bushels.

The new marketing year ending stocks estimate is about 30 million bushels smaller than 2025/26 stocks. Meanwhile, domestic usage rates will increase 5% from the prior year in 2026/27, which is the key factor in USDA’s 2026/27 pricing forecast rising $1/bu. higher than in 2025/26.

Export uncertainty

USDA forecasts 2026/27 U.S. soybean exports at 1.63 billion bushels, up 7% from the current marketing year. As China increases dependence on Brazilian soybean exports, other countries have increased their purchases of U.S. soybeans in 2025/26.

It remains to be seen if that trend will continue in 2026/27. Global soybean and edible oil consumption will continue to rise in the new marketing year. South America will face higher credit and sourcing challenges for inputs ahead of planting 2026/27 crops, which could limit expansion.

The strength of the dollar amidst the Iran War and competition from domestic crushers will cause fresh headwinds for U.S. soybean exports. Ongoing trade talks between the U.S. and China have yet to yield additional soybean purchases.

The threats and opportunities for U.S. whole soybean exports vary across a wide range ahead of the 2026/27 marketing year, so export volume forecasts will likely be a market-moving wild card, especially in the early days of the new crop year.

Crush volumes to the moon

USDA expects 2026/27 soybean crush volumes to rise 5% annually to 2.75 billion bushels. Soybean oil production is forecast at 32.59 billion pounds and soymeal production at 65.025 million short tons, all of which are record high volumes.

Soybean oil consumed for biomass-based diesel is forecast to reach 17.8 billion pounds, up a quarter from 2025/26 volumes and driven by higher Renewable Volume Obligations (RVOs) mandated by the EPA in 2026 and 2027. If realized, biomass-based diesel consumption will overtake food, feed and other industrial usage as the largest category of soybean oil usage.

Food, feed and other industrial usage of soybean oil is expected to drop 530 million pounds to 14.59 billion pounds. Export volumes are forecast to struggle against strong domestic crush margins. The RVOs will limit exportable soybean supplies, which will fall 800 million pounds on the year to 400 million pounds.

Similarly, USDA forecasts soymeal to be rapidly consumed in 2026/27, fueled by a 1.9-million-short-ton increase in export forecasts, which will total 21.7 million short tons. Heavy livestock consumption will also keep demand for soymeal competitive, with USDA calculating a 550-short-ton annual increase, growing domestic disappearance to 44.125 million short tons.

The rapid usage rates are bullish indicators for prices. USDA is forecasting soybean oil prices at $0.70/lb. for 2026/27, which will be the highest price paid for soybean oil since 2021/22. Soymeal prices are projected at $310/ton. That figure is down $5/ton on the marketing year but could see upside potential if export demand and livestock consumption pan out.

Global production

Even as the U.S. relinquishes its hold on global export markets in favor of domestic crush expansion, there are several global dynamics to highlight which could have impacts on pricing.

Yield Reversion: The 2025/26 marketing year featured yield records for several top-producing soy countries. When forecasting, statisticians commonly use an estimate which reflects the midpoint of a trendline yield to ensure reliability. In years following record yields, this gives an estimate which may be lower than the prior year’s high.

USDA held true to this practice in its 2026/27 global yield estimates. The U.S. yield, despite peaking above the trendline at 53.0 bpa in 2025, will be held steady at 53.0 bpa for 2026. Similarly, USDA used conservate estimates for 2026/27 global rapeseed production after record-setting yields the year prior.

Production growth: Global soybean production will increase with larger crops forecasted for the U.S., Brazil and Argentina. Brazil’s 2026/27 soybean harvest is expected to grow 8 MMT to 186 MMT while Argentina’s crop is expected to be 2 MMT bigger at 50 MMT.

Argentina is predicted to export 2.25 MMT fewer for a total of 6 MMT, diverting more soybeans into domestic crush channels instead of exports. Increases to U.S. (2.72 MMT) and Brazilian (2.5MMT) exports will push total shipments for each country to 44.4 MMT and 117.5 MMT, respectively.

Brazil’s planted area is expected to increase 2.8% from the prior year – a much slower pace of expansion relative to the past five years of 4.2% increases. Continued high production costs, low prices, limited capital and tightening margins are expected to slow the conversion of degraded pastureland to crop production. Currency dynamics are also a factor, with a stronger real against the dollar relative to a year ago is also Brazilian soybean producers’ profit margins.

Argentina’s export taxes on soybeans and soy products remain lower than 2025 rates, which could create tension between the export and domestic crush markets. Argentina is the world’s largest soymeal and soybean oil exporter, but steady demand from China for whole soybeans could limit available domestic supplies for crush, likely driving Argentina to import soybeans from Paraguay.

El Niño conditions: Globally, oilseed production is forecasted 19.6 MMT higher in 2026/27 to 718.1 MMT. These forecasts are contingent upon neutral weather conditions. Deviations from these weather patterns will be inevitable as the world grapples with El Niño conditions in the months ahead.

El Niño conditions generally favor adequate rainfall throughout the growing season in both North and South America, with some heightened risk for excessive fall showers during harvest. That forecast could result in higher yields.

Chinese import increase: USDA expects China will import 2 MMT more than the prior year, bringing the 2026/27 total import haul to 114 MMT. China’s hog herd continues to be overstocked, consumers remain weary of pricey pork cuts and local crush margins are less lucrative than in other parts of the world.

These dynamics suggest China will continue to be a price-sensitive global buyer of soybeans and will continue to increase reliance on cheaper Brazilian soybeans. As Brazil produces more meal and crush margins in China waver, it could open the door for China to increase soymeal imports down the road.

Global usage continues to rise: Globally, demand for protein and the stocks which feed protein animals will continue to rise in the 2026/27 marketing year. Ongoing closures to the Strait of Hormuz are constraining energy supplies around the globe, and more governments are toying with increasing biofuel blending to offset the pain of high energy prices.

This is the context in which the soybean complex exists in 2026/27. Total global soybean crush is expected to increase 13.61 MMT (3.7%) from the prior year to 383.14 MMT, reflecting growing global demand for soybeans and soy-based products.