Commodities
Biofuels Update: Chicago Soybean Complex Slips on High Supply; Palm Oil Up Slightly
The Chicago soybean complex weakened on Tuesday due to ample supply, with US soybean planting at a record pace and the Brazilian harvest almost complete.Pulling away from crude oil prices, the May soybean contract on the Chicago Board of Trade declined 0.19% to $11.75 per bushel. The May soybean oil contract inched down 0.08% to 72.20 cents per pound.Soybean planting in the US has progressed 23% as of April 26, up from the previous year's pace of 17% and the five-year average of 12%, according to US Department of Agriculture data.A more aggressive soybean planting in the US could raise domestic stock levels if China does not increase its purchases, according to DuWayne Bosse of Bolt Marketing, as cited by AgWeb. US President Donald Trump and Chinese leader Xi Jinping are set to meet in mid-May, with market participants hoping for a positive outcome from trade discussions.For the current marketing year through April 23, agriculture data showed that the US has inspected 32.8 million metric tons of soybeans for export, down from 43.2 mmt recorded in the year-ago period.In Brazil, a record crop harvest was nearly completed, and the country was entering its peak soybean export season, according to price reporting agency MySteel.Contrary to Brazil's progress, harvest in Argentina has reportedly slowed to 25% from a normal average of 55% due to persistent rainfall.Weather patterns will be key to global production going forward, with the looming El Nino phenomenon likely to impact supply levels."If El Nino conditions do persist into late 2026, Brazilian soybean production for the 2027 harvest could also be affected. No significant impact on US crops is expected under current conditions," Kpler said.The research firm said there was a 93% chance of the weather phenomenon emerging in Q4, higher than the 20% probability in Q2.In Asia, Malaysian palm oil futures were little changed on Tuesday, as weaker fundamentals weighed on the market.The Bursa Malaysia Derivatives' May and June crude palm oil contracts were up 0.07% to 4,468 Malaysian ringgit ($1,130.85) per metric ton and 4,508 ringgit/mt, respectively.Cargo surveyors reportedly estimated that Malaysian palm oil shipments for the first 25 days of April declined between 15.7% and 16.8% from a month earlier. This followed robust export demand in Q1, which rose 29.1% year over year, according to the Malaysian Palm Oil Council.Improving production outlook following a seasonal low also weighed on sentiment.Nonetheless, Indonesia's plan to raise palm-oil-based biodiesel blending to 50% from the current 40% will serve as a tailwind, boosting domestic consumption and reducing exportable supplies.However, sources cited by The Edge Malaysia said the target rollout of B50 by July faces challenges, including a war-driven shortage of methanol used in biodiesel production and high levels of unsold byproducts in storage tanks.The higher biodiesel program, once implemented, could absorb an additional 3 million metric tons per year of palm oil, according to the MPOC.In terms of production, the USDA said in its annual oilseeds report that Indonesia's palm oil output may reach 48 mmt in the 2026/27 marketing year, a 3% increase from the previous year's 46.7 mmt.The government's move to seize illegal plantations and a possible drought related to the El Nino weather phenomenon pose supply risks.This week, palm oil prices are expected to remain rangebound, "with a slightly bearish bias," due to weak export demand and expectations of higher near-term supply, according to PhillipCapital."However, support may come from firmer crude oil prices and steady energy sector demand, which could help limit further downside," Phillip Capital said.Jim Teh, senior palm oil trader at Interband Group of Co., as cited by Bernama, projects palm oil prices to range from 4,200 ringgit/mt to 4,300 ringgit/mt this week due to profit taking, while the MPOC expects prices to approach 4,500 ringgit/mt in the near term.In the US, the May-dated ethanol futures on the NYMEX jumped by a further 2.43% to about $2.01 per gallon on Monday, tracking a recent rally in crude oil prices.