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Biofuels Update: Chicago Soybean Complex Slips on Record Production Outlook

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The Chicago soybean complex dipped on Thursday following a decline in crude oil prices and amid prospects for a record US production in the 2026/27 marketing year.

The September soybean contract on the Chicago Board of Trade fell 0.19% to $11.63 per bushel in early trade. The September CBOT soybean oil contract slipped 0.77% to 68.63 cents per pound, erasing the previous session's gains.

The US Department of Agriculture lowered its 2026/27 US soybean yield projection to 52.7 bushels per acre, versus the July forecast of 53 bushels and market expectation of 52.9 bushels.

However, prices dropped following a 1.4 million acre increase in the estimated harvested area to 85.8 million acres, lifting production forecasts by 44 million bushels to a record 4.52 billion bushels.

Ending stocks are now projected at 320 million bushels, up 10 million from the previous outlook.

Crop growing conditions could improve amid forecasts for rainfall across the US Midwest in the coming days, analysts said.

Nonetheless, the soybean complex continued to receive a boost from Chinese demand, with private exporters reporting another 244,000 metric tons of soybean sales to China for delivery during the 2026/27 marketing year.

In Asia, Malaysian palm oil futures closed higher on Thursday, diverging from crude oil and rival soybean oil, as strong export demand lent support.

Recovering from the previous session's losses, the Bursa Malaysia Derivatives' September crude palm oil contract rose 0.39% to 4,608 Malaysian ringgit ($1,126.46) per metric ton. The October contract gained 0.57% to 4,724 ringgit/mt.

Shipments for the Aug. 1-10 period have so far risen between 2.6% and 14.8% from a month earlier, according to cargo surveyor estimates. This extends a 7.2% and 14.5% month-over-month export growth streak in June and July, respectively.

Malaysia's palm oil export duty will remain at 10% through September despite the lowering of the reference price, according to a circular from the Malaysian Palm Oil Board.

Signs of easing production also provided momentum, with Malaysia's palm oil yield per hectare falling 9.3% in the Aug. 1-5 period relative to the same period of the previous month and with total output dropping 8.4%, according to data cited by market intelligence provider SunSirs.

The figures indicate a "contraction in supply, providing support for palm oil spot prices," SunSirs said.

Meanwhile, high inventories in producing regions weighed on prices, particularly as Malaysia's stockpiles reached a five-month high at the end of July.

"Key focus areas going forward include developments in the drought severity index and the progress of Indonesia's B50 mandate," price reporting agency MySteel said.

In the US, September ethanol prices on the NYMEX rebounded 1.66% to around $1.99 per gallon on Wednesday.

For the week ended Aug. 7, domestic stocks rose to 24.8 million barrels from 24.5 mmbbls a week earlier, according to the US Energy Information Administration.

Inventory levels increased as domestic production edged higher week over week to 1.12 million barrels per day from 1.11 mmbbls/d, and as exports dropped to 109,000 barrels per day from 200,000 b/d.

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