Commodities Expert: Government Policies Threaten Iowa Cattle Markets, Soybean Oil Rally Ahead

An Illinois-based commodities broker is warning Iowa farmers and investors that recent federal policy moves are deliberately pressuring cattle prices, while simultaneously pointing to a major rally in soybean oil as a bright spot for the agricultural economy.

Bill Allen, Vice President of the Pure Hedge Division at Walsh Trading, has been issuing daily market commentary throughout August, tracking what he describes as a coordinated government effort to lower beef prices. His analysis comes at a critical time for Iowa's livestock industry, one of the largest in the nation.

Is the federal government trying to break cattle markets?

Allen points to a series of actions he believes are designed to push cattle prices lower. The reopening of the U.S. Southern Border to Mexican cattle, scheduled for August 24, is a key factor. He also cites comments from Kevin Hassett, Director of the National Economic Council, who said in mid-August that a plan to lower beef prices was “just around the corner.”

“The US Government is still actively trying to knock the Cattle Markets lower,” Allen wrote on August 11. He noted that the government's previous announcement about the border reopening came right after a bearish Cattle on Feed Report, effectively preventing any market rally.

The most recent Cattle on Feed Report, released August 22, showed 102% of cattle on feed, but a surprisingly low placement number of 89%. While the report was expected to be bearish, it turned out bullish, yet Allen says the government's preemptive policy announcement stopped any upward momentum.

“The Government got in front of that news and put a stop to any chance of a rally moving forward,” Allen wrote. “If the new policy was not enough, it showed that they will not stop until they break the Cattle Markets.”

What does this mean for Iowa cattle producers?

For Iowa's cattle industry, these developments could mean continued price pressure. Allen predicts the October 2026 Feeder Cattle contract could trade down to $306.00 before finding a bottom. He plans to start buying at that level, with a strategy to continue accumulating down to $286.00 if the market breaks further.

The Feeder Cattle Index has been steadily declining, dropping 3.44 to 351.93 on August 13. Cash market trades in Iowa were reported at $230 per hundredweight, with no trades confirmed at that level on the most recent trading day.

Allen remains bearish on cattle until he sees a reason to change his outlook, specifically targeting the $306.00 level on October feeders as his trigger point to reverse his position.

Soybean oil: A bullish opportunity for Iowa farmers

While cattle markets face headwinds, Allen is strongly bullish on soybean oil, a crop with significant Iowa acreage. He cites tightening global supplies, surging biofuel demand, and government mandates as drivers for what he believes could be a record rally.

“There is simply not enough of it, demand is through the roof, and currently there is just a 20-Day supply,” Allen said.

Key factors supporting his bullish outlook include:

• U.S. soybean oil stocks down 25% over the last four months
• December 2026 soybean oil settling at 68.12 on August 11, with a target of the 80s
• Global vegetable oil demand rising due to biofuel mandates in Brazil, Indonesia, and the U.S.
• EU rapeseed production damaged by drought, with German output expected to drop 4.5%
• India's monsoon rains running 15% below normal, threatening oilseed crops

EPA delay hits soybean oil prices

On August 25, the EPA delayed the September 1 deadline for biofuel compliance and small refinery exemptions by up to three months. Allen says this caused soybean oil prices to “take a dive out of nowhere,” but he views this as a buying opportunity.

Despite the setback, December 2026 soybean oil settled 1.80 above its intraday low, and Allen says he bought more. He remains confident the rally can restart after the market made a one-month low.

Sugar market also showing strength

Beyond soybeans, Allen is bullish on Sugar #11, which has made new contract highs amid fears of a global supply shortage. Sugar analysts now expect a deficit for 2026-2027, with estimates ranging from 300,000 metric tons to 3.3 million metric tons.

October 2026 sugar settled at 16.73 on August 11, up 2.30 over eight trading days. Allen recommends buying the recent three-cent break in the October contract.

What should Iowa investors watch next?

Allen advises caution when trading on private crop estimates, emphasizing that final USDA numbers are what matter. He expects the fourth quarter to be “fantastic” for the markets he follows.

For cattle, the key levels to watch are $306.00 on October feeders, where Allen plans to cover shorts and begin building long positions. For soybean oil, he sees December 2026 trading well into the 80s by year-end.

Allen encourages Iowa farmers and investors to contact him directly for specific trade recommendations and target levels.

Disclaimer: Futures and options trading involve substantial risk and are not suitable for all investors. Past performance is not necessarily indicative of future results. This article is for informational purposes only and does not constitute investment advice.