Chicago soybeans extended gains for a fourth straight session, reaching a new contract high in early trade, as strong Chinese demand and weak crop conditions buoyed prices.
The September soybean contract on the Chicago Board of Trade rose by a further 0.62% to $12.56 per bushel, and was headed for a third solid weekly gain, this time of more than 3%.
The US Department of Agriculture reported that net soybean sales for the 2026/27 marketing year as of Aug. 20 stood at about 2.5 million metric tons, with 1.1 mmt sold to China and 1.0 mmt to unknown destinations.
China continued to purchase large volumes of US soybeans this week, with the latest USDA data showing a further 333,000 metric tons of purchases for the 2026/27 marketing year.
Meanwhile, 60% of the US soybean crop was rated good to excellent as of Aug. 23, down relative to the previous week's 61% and last year's 69%.
In terms of soybean oil, the September CBOT contract gained 1.87% to 69.27 cents per pound in early trade, but was on track for a 0.12% weekly loss.
A deadline extension for meeting the US renewable fuel standard and an expansion of small refinery exemptions for the 2025 compliance year weighed on the market this week, due to potential biofuel demand weakening.
Nonetheless, reports that 2027 biofuel quotas will be increased to offset higher biofuel exemptions provided some upside toward the end of the week.
As for ethanol, September prices on the NYMEX fell 2.18% to $2.02 per gallon on Thursday, due to higher weekly production and inventories, and prospects for lower near-term demand following recent changes in biofuel policies.
In Asia, Malaysian palm oil futures rebounded on Friday as rival soybean oil firmed, but prices logged weekly losses due to lower crude oil prices and slower exports.
The Bursa Malaysia Derivatives' September crude palm oil contract firmed 0.76% to 4,628 Malaysian ringgit ($1,149.56) per metric ton, but posted a 3.40% weekly loss. The October contract gained 1.53% to 4,788 ringgit/mt, but lost 2.96% over the week.
Weaker exports weighed on the market despite prospects of lower supply, after cargo surveyors reportedly estimated Malaysian shipments for the Aug. 1-25 period to have declined 11.4% to 20% from a month earlier.
"The palm oil production areas are gradually entering the seasonal production downturn, but weak export demand served as a counterbalancing factor, leaving the overseas market without a clear short-term direction," price reporting agency MySteel said.
In top buyer India, upcoming festivities could boost palm oil purchases but higher prices compared with rival soybean oil have been pressuring demand.
In key importer China, demand could be impacted as domestic inventories of major edible oils, including soybean oil, palm oil, and rapeseed oil, have risen above the historical three-year average to around 2.6 mmt as of Aug. 21, according to data cited by market intelligence provider SunSirs.
Analysts raised concerns about persistently high stockpiles in producing regions should near-term demand remain subdued. Malaysia's palm oil stocks reached a five-month high in July.
The supply and demand balance could improve once Indonesia's higher 50% biodiesel blend takes full effect in October, increasing domestic consumption and reducing available supplies for the export market.
A strong El Nino weather phenomenon, potentially developing in Q4, is likely to impact fresh fruit bunch production going forward, considering a typical six-to-nine-month lag. The Indonesian Palm Oil Producers Association, Gapki, expects the country's output to reduce by up to 5 mmt as early as next year, The Star reported.
Supply factors are likely to underpin prices, with the Malaysian Palm Oil Council projecting crude palm oil futures to remain above 4,600 ringgit/mt in September.