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Biofuels Update: Chicago Soybean Complex Firms on Chinese Demand

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The Chicago soybean complex extended gains on Friday, diverging from the weaker crude oil prices, as Chinese buying provided support.

The September soybean contract on the Chicago Board of Trade firmed 0.30% to $11.63 per bushel in early trade. The September CBOT soybean oil contract was up 0.35% to 67.98 cents per pound.

The US Department of Agriculture reported another 122,000 metric tons of soybean sales to China for delivery during the 2026/27 marketing year. Chinese buyers already bought about 1 million metric tons of US soybeans last week, based on tallied data by Trading Economics.

However, "the negative feedback effect of high prices on (Chinese) demand is gradually emerging," price reporting agency MySteel said, adding that "significant restocking and price-locking operations are expected to materialize only after prices correct lower."

Expectations of improved yields in the US also countered positive demand sentiment and capped price gains, amid forecasts of rainfall during the critical crop growing stage in the coming week.

Market attention is now expected to shift to the USDA's supply and demand outlook report due on Aug. 12.

In Asia, Malaysian palm oil futures closed lower on Friday ahead of July industry data to be released on Aug. 10, although prices still posted a 0.7% weekly gain amid strong exports.

The Bursa Malaysia Derivatives' September crude palm oil contract slipped 0.41% to 4,606 Malaysian ringgit ($1,124.79) per metric ton. The October contract dipped 0.19% to 4,677 ringgit/mt.

Expectations of higher output in July, as palm trees entered their peak production phase, also weighed on prices, following a Reuters survey showing a 7.4% month-over-month increase to about 1.8 million metric tons.

This lifted inventories, which were estimated to have reached a five-month high in July, despite a 12.1% to 19.5% growth in exports.

India has contributed to the recent export demand increase, following a reported 50% month-over-month jump in palm oil imports to 733,000 metric tons ahead of festivities.

However, the pace of increases in shipments still lags output growth, slowing destocking in producing countries, according to analysts cited by digital financial platform BigGo Finance.

A softening local currency could provide some export momentum, as it makes exports cheaper for foreign buyers. Malaysian ringgit has so far eased about 0.1% against the US dollar this month.

Other positive market drivers that will support palm oil prices in H2 include new biofuel policies in Indonesia and prospects for lower yields due to a developing El Nino weather phenomenon.

Meanwhile, September ethanol prices on the NYMEX rebounded 0.52% to around $1.94 per gallon on Thursday, as weekly industry data showed a decline in inventories due to a surge in exports and a moderation in output.

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