Soybeans slide after EPA’s smaller than expected proposal slams soyoil (NYSEARCA:SOYB)

Soybeans fell in Chicago trading Thursday, as soybean oil sold off sharply after the U.S. government proposed smaller than expected biofuels blending requirements.

CBOT soybeans (S_1:COM) for January delivery ended -2.7% to $14.29 3/4 per bushel, snapping a five-session winning streak, as front-month December soyoil sold off 9%.

Soybean weakness weighed on corn (C_1:COM), with the March contract closing -1% to $6.60 1/2 per bushel, and March wheat (W_1:COM) settled -1.6% to $7.83 per bushel on disappointing export sales.

ETFs: (NYSEARCA:SOYB), (CORN), (WEAT), (DBA), (MOO)

Soybeans and broader commodity markets had been rising, in part from signs China may soften its strict COVID-19 restrictions following rare public protests.

The U.S. Environmental Protection Agency proposed smaller increases than traders expected in the amount of ethanol and other biofuels that oil refiners must blend into their fuel over the next three years.

The EPA’s proposed renewable fuel blending targets “significantly undercounts existing biomass-based diesel production and fails to provide growth for investments the industry has already made in additional capacity, including for sustainable aviation fuel,” the Clean Fuels Alliance America said.

For renewable fuels, the EPA proposed a volume target of 20.82B gallons in 2023, up less than 1% from 2022.