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Biofuels Update: Major Feedstocks Mixed on Crude Oil Volatility

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Major biofuel feedstocks were mixed on Monday as crude oil prices fluctuated, following US President Donald Trump's remarks that Israel and Iran were seeking an "immediate ceasefire" shortly after the two countries exchanged strikes.

The July soybean contract on the Chicago Board of Trade dropped for a seventh consecutive session by a further 0.42% to $11.17 per bushel. The July soybean oil contract extended losses for a third straight session and fell 0.67% to 73.62 cents per pound in early trade.

The lack of Chinese purchases and favorable weather conditions in the US Midwest, supporting soybean planting, pressured prices.

In China, soybean oil inventories at processing plants are expected to further grow, price reporting agency MySteel said.

The country continues to receive large volumes of imported soybeans, mainly from South America, resulting in buildup of soybean oil and increased meal production, according to agricultural website Feedlot. This has kept local soybean meal prices in a downward trend.

In Brazil, data from the Secretariat of Foreign Trade reportedly showed a rise in May exports to 14.83 million tons, versus the previous year's 14.10 mmt.

Plentiful and cheaper Brazilian cargoes continued to compete with Chicago soybeans, which were recently sold at premiums of $0.20 to $0.30 per bushel, according to ADM Investor Services.

In Asia, Malaysian palm oil futures moved in opposite direction and rose 0.29% on Monday, as a weakening local currency offered some support by boosting export attractiveness.

The Bursa Malaysia Derivatives' July crude palm oil contract edged higher by 0.29% to 4,539 Malaysian ringgit ($1,115.26) per metric ton. The August contract inched up 0.46% to 4,575 ringgit/mt.

Malaysian ringgit declined against the US dollar by more than 1% on Monday, to extend last week's losses of around 1.6%. This makes shipments cheaper to foreign buyers, supporting exports, which were reportedly estimated to have dropped 8.8% to 15.5% in May from a month earlier.

A survey by Reuters showed that lower exports largely raised inventories for a second straight month in May, while official data from the Malaysian Palm Oil Board are set to be released on June 10.

The recent implementation of a higher biodiesel blend of 15%, versus the previous 10%, could help maintain palm oil price stability due to increased domestic demand and reduced dependence on the export market, according to Federal Land Development Authority chairman Ahmad Shabery Cheek said, as cited by The Edge Malaysia.

Out of Malaysia's 20 mmt of annual palm oil production, around 3 mmt are used for food products and 1 mmt are blended in biodiesel, leaving 15 to 16 mmt for export, the official reportedly said.

In Indonesia, a higher biodiesel mandate of 50%, compared with the current blend of 40%, is targeted for implementation next month. This could reduce exportable supplies, at a time when the government has just tightened restrictions on exports by centralizing all shipment to a state-backed entity.

Going forward, a developing El Nino weather phenomenon, potentially impacting palm oil yields, is expected to support palm oil prices and the plantation sector, Kenanga Research, as cited by multiple outlets, said.

In the US, July ethanol prices on the NYMEX ended five sessions of losses and rose 0.52% to $1.94 per gallon on Friday.

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Commodities

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Commodities

US SPR to Gain 40 Million Barrels After Iran Conflict Ends, Wright Says

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