Major biofuel feedstock futures eased on Thursday amid profit taking, offsetting upsides from higher crude oil prices and weather-related supply risks.
The May soybean contract on the Chicago Board of Trade dropped 0.24% to $11.62 per bushel. The May soybean oil contract slipped 0.54% to 71.29 cents per pound.
Soybean prices have recently hit chart resistance resulting in profit taking, according to Sam Hudson of Cornbelt Marketing, as cited by AgWeb.
Bryan Doherty of Total Farm Marketing, also cited by the agricultural news agency, said a strong market catalyst is needed to get above this resistance. Recent soybean oil strength from rising biofuel demand may not be sufficient, as slowing exports were putting downward pressure.
Soybean oil exports for the week ended April 16 were estimated to be between net reduction of 10,000 metric tons and sales of 14,000 mt, while soybean exports were expected to range from 200,000 mt to 600,000 mt. Industry data will be released on Thursday.
Additional export demand may come from China, with market participants keenly eyeing the Trump-Xi summit in mid-May.
However, the ongoing US-Iran conflict may complicate US-China trade relations, possibly prompting China to turn to Brazil and Argentina for soybean imports, ADM reported, citing Louis Dreyfus chief risk officer Vijay Chakravarthy.
In terms of supply, occurrence of rain could slow US planting, providing some price support.
In Asia, Malaysian palm oil futures eased from near two-week highs on Thursday, as traders booked profits and as weak exports offset expectations of tighter supply due to the El Nino weather phenomenon.
Ending a three-session rally, the Bursa Malaysia Derivatives' May crude palm oil contract lost about 1% to 4,505 Malaysian ringgit ($1,135.91) per metric ton. The June contract dropped by the same extent to 4,552 ringgit/mt.
Both contracts were up 2.7% to 2.9% so far this week, reversing two straight weekly losses.
Prices also declined on Thursday despite an increase in crude oil prices and a weakening in the local currency.
Export demand for the current month has softened, with cargo surveyors reportedly estimating a 25.6% to 25.8% month-over-month drop in Malaysian shipments for the first 20 days of April, largely due to lower Middle Eastern demand.
Nonetheless, expanding biofuel use in Southeast Asian producers, following improved economics and to help meet domestic market needs amid ongoing supply chain disruptions, will support palm oil going forward.
Higher biodiesel programs in Indonesia, Malaysia, and Thailand, as well as the potential impact of El Nino phenomenon on palm oil output, will tighten supply.
With the market looking at how extreme weather conditions will impact production, "prices still have room to rise," according to price reporting agency MySteel.
BMI Research, as cited by The Edge Malaysia, said El Nino concerns will be a supportive factor going forward and will temper declines brought about by fading geopolitical risk premium.
In the short term, it reportedly expects developments in the US-Iran conflict to continue influencing market trends, with palm oil prices likely to slip to around 4,200 ringgit/mt in Q2, assuming de-escalation in the Middle East conflict.
In the long term, "the interplay of biodiesel expansion, weather risks, and geopolitics is setting the stage for a more constrained global palm oil balance going into 2026-27," said B.V. Mehta, executive director at Solvent Extractors' Association of India.
In the US, the May-dated ethanol futures on the NYMEX continued to gain for a third straight session on Wednesday, rising 1.05% to $1.92 per gallon, on lower production and stronger exports.
In the week ended April 17, ethanol production in the US declined to 1.0 million barrels per day, from 1.1 mmbbls/d a week earlier, according to data released by the US Energy Information Administration.
The decline is expected during a seasonal downtime in planting, agriculture data provider DTN said, adding that production in the current season is still up 2%, with margins remaining strong.
Exports grew week over week to 91,000 barrels per day from 81,000 b/d, data also showed.
However, stocks rose to 26.9 million barrels from 26.7 mmbbls.