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Biofuels Update: Chicago Soybean Oil Tracks Crude Oil Gains; Soybeans Down

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Chicago soybean oil futures rose on Monday, moving in tandem with crude oil, while soybeans eased ahead of the US Department of Agriculture's acreage and grains stocks report, due on June 30.

The July soybean oil contract on the Chicago Board of Trade gained 0.14% to 71.40 cents per pound in early trade. The July soybean contract lost 0.60% to $11.19 per bushel.

Market expectations for US soybean acreage were mixed, with MySteel reporting 85.4 million acres, while Kluis Commodity Advisors and Successful Farming estimating 83.5 million acres. These compare with USDA's March projection of 84.7 million acres and last year's 81.2 million acres.

Stocks as of June 1 are reportedly projected to reach their highest for that date at 1.05 billion bushels, according to MySteel.

Meanwhile, elevated temperatures in the Midwest continued to raise concerns over the condition of the crop, offering some price upside.

The market was also awaiting new purchases from China, where domestic stocks rose 31,200 metric tons to about 7.5 million metric tons for the 26th week of the year, according to MySteel.

In terms of local demand in the US, higher biodiesel blend levels will underpin growth, with around 62% of soybeans expected to be crushed this year to comply with new policies, Brownfield reported, citing Devin Mogler, president and chief executive of the National Oilseed Processors' Association.

In Asia, Malaysian palm oil futures firmed 0.4% on Monday as rival soybean oil rose and as robust exports provided support despite a strengthening local currency.

The Bursa Malaysia Derivatives' July and August crude palm oil contracts closed at 4,523 Malaysian ringgit ($1,113.16) per metric ton and 4,558 ringgit/mt, respectively.

Cargo surveyors reportedly estimated Malaysian shipments for the June 1-25 period to have risen between 10.6% and 11.1% from a month earlier.

Exports grew despite increasing costs to foreign buyers as Malaysian ringgit continued to strengthen against the US dollar for a fifth consecutive session on Monday.

However, market intelligence firm SunSirs said that growth in shipments is narrowing, as the recent numbers followed a 19.1% to 25.0% jump during the June 1-20 period.

"This slowdown indicates weakening export momentum and reduced support from the demand side, exerting moderate bearish pressure on palm oil spot prices," SunSirs said.

In key buyer China, "domestic palm oil demand remains largely for essential needs," MySteel said.

Top importer India, meanwhile, was reportedly estimated to have imported more than 600,000 mt of palm oil this month, up from 549,356 mt in May.

Export dynamics may be influenced by Indonesia's B50 biodiesel mandate, set for implementation on July 1, as this will expand domestic biofuel use and consequently reduce exportable supplies.

Analysts expect palm oil prices to remain supported as a result, particularly amid prospects for lower supplies resulting from a developing El Nino weather phenomenon.

Meanwhile, July ethanol prices on the NYMEX continued to rise for a third straight session on Friday, strengthening by a further 1.60% to $1.90 per gallon.

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