Major biofuel feedstock futures were mixed on Tuesday, as crude oil prices slipped following reports that the US and Iran may resume peace talks despite a US blockade on vessels calling at Iranian ports.
The May soybean oil contract on the Chicago Board of Trade fell 0.35% to 66.27 cents per pound, while the May CBOT soybean contract rose 0.34% to $11.66 per bushel in early trade.
Soybeans diverged from crude oil as the market found some support from a weakening US dollar, which improves the attractiveness of US exports.
However, price gains were capped by expectations that US output will be higher, as farmers shift acreage from corn to soybeans due to rising fertilizer costs, price reporting agency MySteel said.
The US Department of Agriculture on Monday reported that soybean planting progress reached 6% as of April 12, above the 2% pace recorded a year ago.
The agency also reported that the US inspected 814,562 metric tons of soybeans for export in the week ended April 9, up from 804,892 in the previous week. This brings total export inspections for the current marketing year to 31.5 mmt, compared with the prior season's 42.1 mmt.
In Asia, Malaysian palm oil prices declined 2% on Tuesday, as soybean oil eased and declining exports weighed on sentiment.
The Bursa Malaysia Derivatives' May and June crude palm oil contracts dropped to their lowest since mid-March at 4,420 Malaysian ringgit ($1,117.01) per metric ton and 4,466 ringgit/mt, respectively.
Preliminary estimates of a 30.7% to 38.9% month-over-month drop in Malaysian shipments during the first 10 days of April pressured prices.
In India, palm oil purchases reportedly fell to a three-month low of 689,462 metric tons in March, from 847,689 mt in February, according to the Solvent Extractors' Association of India. Soybean oil imports also softened 4% month over month to 287,220 mt.
Indian buyers will likely remain cautious in stepping up purchases through next week as prices remain elevated, but may eventually increase imports to stock up ahead of seasonal demand, according to analysts cited by The Edge and Trading Economics.
Competitiveness of Malaysian exports is expected to improve as supplies from Indonesia and Thailand decrease with the implementation of higher biofuel blending rates.
Supply uncertainties due to the ongoing Middle East conflict will also continue to boost Malaysian exports as buyers accelerate stockpiling despite rising prices, Bernama reported, citing investment banks.
This consumer behavior has been observed in March, when Malaysian exports jumped 40.7% from month-ago levels despite a surge in prices following the onset of the geopolitical conflict in late February, Kenanga Investment Bank reportedly said.
Malaysian inventories could drop to around 2 million metric tons over the next two months as exports remain robust, according to Public Investment Bank.
CIMB Securities, as cited by New Straits Times, projects domestic stocks to fall to 2.2 mmt in April from 2.3 mmt in March, if higher demand is sustained and production declines.
Fertilizer supply disruption and the El Nino phenomenon pose downside risks to the country's palm oil output.
In the US, May-dated ethanol futures on the NYMEX inched up 0.13% to about $1.94 per gallon on Monday.