Ethanol futures steadied on Wednesday as weekly production remained flat, while palm oil and soybean oil declined on Thursday as crude oil prices eased.
The Nymex November ethanol futures contract was stable at about $2.08 per gallon on Wednesday, following a four-session rally.
The US Energy Information Administration reported that domestic ethanol output stood at 1.1 million barrels per day in the week ended Sep. 11, unchanged from a week earlier.
US inventories were up slightly at 25.22 million barrels relative to the prior week's 25.19 mmbbls, despite a rise in exports to 161,000 barrels per day from 147,000 b/d.
Current strong diesel prices are expected to weigh on farm activities, potentially impacting prices for corn, an ethanol feedstock.
Nonetheless, wide price differentials between ethanol and diesel are strengthening the case for E98 tractors as an alternative to diesel-operated farm equipment.
"Midwestern ethanol is selling for $3.33/gal or 61.3% under the price of diesel. Makes a compelling economic case for those E98 tractors that John Deere has prototyped," Tom Kloza of Kloza Advisors said. The new technology, which uses gasoline blended with 98% ethanol, is expected to be commercially launched within five years.
In other countries, ethanol blending in gasoline will be increased to reduce reliance on fuel imports amid the current energy crisis.
Indonesia reportedly plans to double its ethanol blending target to 20% by 2028, supported by the planned expansion of its sugarcane plantation by 2 million hectares and development of ethanol-processing facilities.
In Chile, the energy ministry proposed to blend 10% ethanol into its gasoline to reduce fuel costs by $107 million per year, Reuters reported.
In Thursday's early trade, the October soybean oil contract on the Chicago Board of Trade dipped by a further 1.26% to 68.32 cents per pound, tracking crude oil losses. Prices for raw material soybeans also fell, with the November contract declining 0.21% to $13.18 per bushel.
The soybean complex eased ahead of the US-China summit next week, although market participants remained optimistic that China would sustain its large purchases of US soybeans and that the two countries would agree to improve trade relations.
"The trade remains hopeful that US/China will drop reciprocal tariffs at next week's Trump/Xi summit in Washington," ADM analyst Mark Bowman said.
In China, soybean oil inventories as of Sep. 11 rose 2% week over week to 1.5 million metric tons, according to market intelligence provider SunSirs, noting that "this rise in supply-side pressure has weighed on spot prices."
Moving in tandem with soybean oil and crude oil, Malaysian palm oil eased on Thursday, although concerns over lower Indonesian output due to wildfires limited losses.
As trading resumed after a public holiday, the Bursa Malaysia Derivatives' October crude palm oil contract lost 0.61% to 4,712 Malaysian ringgit ($1,158.08) per metric ton. The November contract fell 1.06% to 4,832 ringgit/mt.
Malaysian shipments of palm oil, a key biodiesel feedstock, reportedly declined by 17.8% to 25.6% in the first half of September relative to month-ago levels, extending export weakness seen in August.
A weakening of the local currency could improve the competitiveness of exports by making them cheaper to foreign buyers, with the Malaysian ringgit easing against the US dollar by 1.8% so far this month.
Strong Indian demand ahead of upcoming festivities could also boost shipments. In August, India's palm oil imports reportedly rose to a six-month high of 782,761 metric tons.
"This provides positive support for spot palm oil prices, serving as a moderately bullish factor," SunSirs said.
India's imports of soybean oil also grew, reaching a record 628,736 mt, as prices came in lower than those of palm oil.
The country is considering lowering its import taxes on vegetable oil to curb inflation, according to sources cited by Reuters, encouraging more buying and likely supporting palm oil prices.
On the supply side, output from Kalimantan, a major producing region in Indonesia, could drop by 12% to 15% in Q4 due to drought and forest fires, StoneX analyst Cheang Kang Wei told the news agency.
The Indonesian Palm Oil Association, Gapki, had earlier revised its 2026 production estimates for Indonesian palm oil by 2.9% to 56.8 mmt.
Analysts expect palm oil prices to remain supported in the coming months amid supply risks, Indonesia's B50 roll-out, and prospects of higher biofuel demand due to higher fossil fuel prices.