Major biofuel feedstocks slipped on Thursday despite rising crude oil prices, as profit-taking ahead of the US Department of Agriculture's supply and demand report weighed on the Chicago soybean complex and as rising stocks pressured Malaysian palm oil.
The October soybean oil contract on the Chicago Board of Trade eased 0.73% to 69.50 cents per pound in early trade.
Meanwhile, the November soybean contract gained 0.63% to $13.18 per bushel, as strong Chinese demand continued to lend support.
Poor crop ratings and lower yield prospects also helped prop up prices, with market participants expecting US soybean yield to decline to 52.5 bushels per acre, relative to the USDA's August outlook of 52.7 bushels per acre.
The new USDA report due on Sep. 11 is expected to include field survey data, providing better insight into how hot and dry weather conditions have impacted the crop.
In terms of demand, the agency will likely keep estimate moves limited despite recent big sales, according to DTN analyst Rhett Montgomery, factoring in Brazil's 2027 crop estimates. Montgomery's 2026/27 export estimates stand at 1.73 billion bushels, up from the USDA August forecast of 1.66 billion.
As for ethanol, October prices on the NYMEX fell for a third consecutive session on Wednesday, dipping a further 1.22% to $2.03 per gallon, as traders awaited the USDA's report and the US Energy Information Administration's weekly inventories, exports, and production data.
Average US ethanol content in gasoline exceeded 11% for the second straight month in June and the one-year average blend rate reached a record 10.58%, according to the Renewable Fuels Association.
The data indicated stronger sales for higher blends like E15 and E85, as ethanol prices came in lower by at least $1/gal compared with other gasoline blending components. The US mainly sells gasoline with 10% ethanol, or E10.
In Asia, Malaysian palm oil futures extended losses on Thursday as industry data showed a rise in inventories due to weaker exports and higher production.
The Bursa Malaysia Derivatives' October crude palm oil contract fell 1.48% to 4,716 Malaysian ringgit ($1,166.03) per metric ton. The November contract dropped 1.63% to 4,885 ringgit/mt.
Malaysian palm oil stockpiles rose 7.48% month over month to 2.8 million metric tons in August, the highest since December 2025, according to Malaysian Palm Oil Board data. Inventories were also higher compared with the previous year's 2.2 mmt.
Stocks climbed as exports fell 7.5% from a month earlier to 1.3 mmt, while output grew 1.4% to 1.8 mmt.
Inventory growth "reflects ample supply and a relatively loose supply-demand balance, factors that are expected to weigh on spot prices," market intelligence provider SunSirs said.
In top importer India, aggressive buying of edible oils ahead of festivities led to port congestion and filled storage capacity, bringing imports to between 1.5 mmt and 1.9 mmt in August, market sources told S&P Global.
India's purchases of crude palm oil likely came in at 793,636 metric tons in August, lower than soybean oil imports of 858,706 mt.
Cheaper prompt shipments relative to deferred cargoes triggered large-scale buying despite slow consumption, potentially reducing India's appetite for edible oil in the coming months, the research firm said.
Nonetheless, a weakening local currency could boost the appeal of its export offer, while elevated crude oil prices could improve biofuel economics, providing some demand upside.
In Indonesia, supply uncertainties due to drought and forest fires continued to provide upward momentum, while the roll-out of a higher 50% biodiesel blend was adding near-term support.
The government aims to fully implement B50 by Oct. 1 and to explore raising it to a B60 blend next year to reduce reliance on diesel imports.