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Biofuels Update: Feedstock Prices Track Crude Oil Gains

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Major biofuel feedstock futures rose on Monday as demand sentiment improved with rising crude oil prices, making biofuels more economical than fossil fuels.

The August soybean contract on the Chicago Board of Trade extended last week's nearly 5% gain and inched up 0.48% to $11.97 per bushel in early trade.

The corresponding August soybean oil contract also gained 1.85% to 71.76 cents per pound, following the previous week's 5.5% rise.

A series of Chinese purchases also supported prices, with the US Department of Agriculture reporting on Friday that China bought another 264,000 metric tons of US soybeans for delivery in the 2026/27 marketing year.

This followed USDA's reports last week that the country purchased 136,000 mt and 472,000 mt of US soybeans.

Prices increased despite the agency's latest supply and demand report indicating that 2026/27 US soybean crop will reach a record 4.48 billion bushels.

Outlook for exports was raised by 30 million bushels, largely offsetting the production increase and keeping the ending stocks unchanged at 310 million bushels.

Soybean prices will likely remain bullish if China sustains its large purchases to meet its 25 million metric ton pledge, AgWeb reported, citing StoneX chief commodities economist Arlan Suderman.

In the near term, price reporting agency MySteel expects futures to trade "with a firm bias" between $11.70 and $12.00 per bushel, as markets focus on Chinese purchases of US soybeans.

In Asia, Malaysian palm oil futures closed higher on Monday, tracking gains in crude oil and rival soybean oil.

The Bursa Malaysia Derivatives' August crude palm oil contract was up 0.38% to 4,493 Malaysian ringgit ($1,101.17) per metric ton. The September contract firmed 0.44% to 4,533 ringgit/mt.

Prices also rose as exports grew, with cargo surveyors cited by Trading Economics estimating July 1-10 shipments to have increased by 1.6% to 5.1% from a month earlier.

This followed a 6.2% month-over-month rebound in June exports to 1.2 million metric tons, according to the Malaysian Palm Oil Board.

However, rising inventories due to high seasonal output weighed on the market. MPOB data last week showed stocks rose to their highest since March at 2.5 mmt in June, as production grew 8.1% month over month to 1.6 mmt.

"The near-term supply glut is unlikely to change," MySteel said, citing the continued buildup of inventories in the country and the upcoming peak production season.

Meanwhile, analysts expect supplies to tighten toward the end of the year through 2027 as a strong El Nino weather phenomenon impacts yields.

Kenanga Research raised its 2026 crude palm oil price outlook by 4% to 4,400 ringgit/mt as a result, The Star reported, and also increased its 2027 forecast by 6% to 4,450 ringgit/mt.

Following biofuel feedstocks' recent uptrend, August ethanol prices on the NYMEX increased for a third straight session by a further 1.42% to $1.96 per gallon on Friday.

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Commodities

US Weekly Natural Gas Prices Decline on Bearish Storage Build, Milder Weather Outlook

US natural gas prices ended the week lower amid higher-than-expected gas injections into storage, despite above-normal temperatures and record power burn.In the futures market, the Nymex front-month August contract fell to $2.95 per million British thermal unit, down from $3.22/MMBtu on July 3.Natural gas spot prices dropped by $0.02/MMBtu to $3.31/MMBtu during the week ended July 8, from $3.33/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released Thursday.Prices were mixed across most major regional hubs, ranging from a decrease of $1.83/MMBtu at Algonquin Citygate to an increase of $1.48/MMBtu at SoCal Border-Ehrenberg.The Southwest saw the lowest prices in the country, despite seeing weekly increases, and even with Waha prices climbing to the highest sustained daily averages since the Winter Storm Fern earlier this year.US LNG feedgas flows retreated during the week, with averages dropping below 19 billion cubic feet, while still being above the 30-day moving average of 18.87 Bcf, according to the Bloomberg LNG Feedgas Model.The net injection into storage for the week ended July 03 was 61 Bcf, down from last week's 87 Bcf, bringing total gas inventories to 2,983 Bcf, according to EIA data.The net build came in slightly above forecasts, which expected 60 Bcf in net injection into working gas for the week. It was also above the prior year's figures at 53 Bcf, and the five-year average for this period, at 51 Bcf, according to data compiled by Investing.com.Reports were mixed across regions, with the Midwest reporting the highest net injection at 23 Bcf, followed by South Central and Nonsalt regions at 14 Bcf and 15 Bcf, respectively. The Salt region, however, reported a 1 Bcf withdrawal, amid high gas-fired power burn during the week.At 2,983 Bcf, US working gas inventories were 15 Bcf, or 1% below the corresponding period a year ago, while reporting a surplus of 185 Bcf, or 7% compared to the five-year average for this period.According to Pinebrook Energy Advisors, this storage build suggests "a looser supply/demand balance than the market had anticipated," while adding that going forward, the markets would remain focused on how temperature forecasts evolve for additional cues.Weather forecasts, which had pointed to above-normal temperatures across most of the country in recent weeks, are starting to turn, with the northwest set to see normal temperatures from July 17 to July 23, according to the National Weather Service.A total of 31 LNG carriers departed US ports during the week, down from 36 the previous week, with a combined capacity of 117 Bcf, 19 Bcf lower than a week earlier.In international markets, European TTF gas prices averaged $15.39/MMBtu for the week ended July 8, $1.36/MMBtu higher than the previous week. Meanwhile, the Japan-Korea Marker averaged $16.21/MMBtu, about $0.45/MMBtu above the prior week.The EIA's Short-Term Energy Outlook for July released Tuesday estimated natural gas consumption in the power sector to reach a record in 2027 as electricity demand continues to surge.The agency forecasts that natural gas use for power generation will increase by 2% in 2026 and by another 4% in 2027, to a record 38.1 Bcf per day. Monthly demand is expected to reach an all-time high of 50.6 Bcf/d in July 2027.Higher electricity demand, additional natural gas-fired generating capacity and relatively low natural gas prices will drive the increase, the EIA said.US gas-fired capacity is expected to reach 508 gigawatts by the end of 2027, up 3% from 2025.Summer natural gas demand for power generation is expected to average 42.2 Bcf/d this year, up 0.5 Bcf/d from summer 2025, and then rise to 46.3 Bcf/d in summer 2027.Renewable generation will supply much of the increase in electricity output, while gas plants will continue to meet peak demand, according to the EIA.The EIA expects total US natural gas consumption to increase by 3.1 Bcf/d from 2025 to 2027, with the electric power sector accounting for 2.3 Bcf/d, or 7% of the increase.Weather remains the biggest uncertainty, as hotter summer temperatures could further boost electricity demand.Record Permian production should keep natural gas inventories above the five-year average and limit price gains, the agency said.Working gas inventories are expected to reach 3,966 Bcf by the end of October, 5% above the five-year average.Above-average natural gas inventories heading into winter are expected to keep Henry Hub spot prices at $3.57/MMBtu in Q4 2026, down 5% from the same quarter a year earlier, the EIA said.Henry Hub natural gas spot prices are estimated to average at about $3.60/MMBtu over 2026 and 2027, analysts said."Adjusted for inflation, that price is about 10% below the average Henry Hub price from 2016 through 2025," according to the STEO.The agency expects stronger demand next year, narrowing the inventory surplus to 1% above the five-year average by the end of October 2027.Henry Hub prices are forecast to average $3.78/MMBtu in the Q4 of 2027, up 6% from a year earlier, while the full-year 2027 average is expected at just under $3.50/MMBtu, slightly below the nearly $3.60/MMBtu average projected for 2025 and 2026, according to the STEO.Meanwhile, the US gas rig count remained unchanged from the previous week at 126, in the week ending July 10, according to data from Baker Hughes (BKR) released Friday. That compares with 108 gas rigs in operation a year earlier.The consolidated North American oil and gas rig count, a key early indicator of future production levels, dropped by 10 to 760 from 770 the previous week.

$BKR
Commodities

US Natural Gas Update: Futures Decline on Cooler Weather Outlook

Natural gas futures extended Thursday's losses on Friday, falling to a 1.5-month low as forecasts for cooler US weather reduced cooling demand expectations, while ample domestic supplies added to the bearish sentiment.The front-month Henry Hub contract and the continuous contract both dropped by 2.12% to $2.948 per million British thermal units.Updated weather models showed cooler temperatures across key demand regions over the next two weeks, prompting traders to lower expectations for near-term cooling demand, Gelber & Associates said.It noted that the latest forecast removed meaningful heat from the 6-15-day outlook, particularly across the central and eastern US, although it said a brief mid-July warm spell remains intact.Total Lower-48 demand slipped 0.4 Bcf/d day over day to 77.7 Bcf/d, although it remained 0.6% above year-ago levels, Barchart said, citing BNEF data. According to Celsius Energy, US power burn totaled 44.7 Bcf/d on July 9, up 0.9 Bcf/d from the previous day but 3.8 Bcf/d below the same day last year.Less demand is expected from the export sector as Freeport LNG started maintenance work on its pre-treatment and liquefaction facilities. Work is expected to continue until late August. Daily LNG feedgas demand weakened on Friday. Net deliveries to US LNG export terminals fell by 0.8 Bcf/d to 18.2 Bcf/d on Friday, down 5.2% from a week earlier.Supply fundamentals also remained bearish. The US Energy Information Administration reported Thursday that working natural gas inventories stood 6.6% above the five-year average as of July 3.While daily US output and import levels have fallen, supplies are considered abundant. Lower-48 dry gas production was estimated at 112.6 Bcf/d on Friday, down 0.9 Bcf/d from the previous day but up 5.2% from a year earlier. EIA on Tuesday raised its forecast for 2026 US dry natural gas production to 111.2 Bcf/d from its June estimate of 111.0 Bcf/d.Gelber & Associates said Friday's supply-demand balance remained loose, and calculated total supply at 115.8 Bcf/d versus demand of 112.0 Bcf/d, leaving the market oversupplied by 3.8 Bcf/d."Modest supply slippage provides some support," Gelber said. "However, it is unlikely to outweigh the immediate loss of export demand and the cooler extended forecast until stronger summer power burn returns."

Commodities

Market Chatter: BHP Evaluates Chile Asset Disposal Valued at Up to $2 Billion

BHP Group is considering monetizing a desalination plant and electricity transmission assets in Chile as it directs more capital toward its copper business, Bloomberg reported Friday, citing people familiar with the matter.The company has not decided whether to proceed because the review remains at an early stage. Discussions continue over the timing, structure and valuation of a potential deal, with the assets estimated to carry a combined value of $1.5 billion to $2 billion, according to the sources.The report said any successful bidder would likely enter long-term service agreements with BHP, with the company's largest copper mines underpinning steady cash flows.BHP Group did not immediately reply to' request for comment.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)