Major biofuel feedstocks were mixed on Friday amid crude oil price volatility, but weekly losses looked inevitable after recent sharp declines in the energy market.
The July soybean oil contract on the Chicago Board of Trade was up 0.38% to 74.43 cents per pound in early trade, but was on track for a weekly decline of almost 1%.
The July soybean contract gained 0.34% to $11.96 per bushel on Friday, but was set to lose 0.58% over the week. Price reporting agency MySteel said that soybeans "may continue to test the key psychological level of $12.00 per bushel" amid crude oil price fluctuations.
The US soybean complex received support from expectations of higher Chinese demand, with the Trump-Xi summit set to happen next week.
Market participants cited by S&P Global had mixed views on the prospects of China committing to buying US soybeans. US sources were doubtful, although Chinese sources were reportedly positive on the matter.
For the week ended April 30, industry data showed that the US exported soybeans mainly to China, with 200,900 metric tons shipped to the country out of a total 530,800 mt. Total weekly exports came in lower than the previous week's levels by 13% and versus the four-week average by 25%.
In terms of net sales, weekly volumes dropped to a marketing-year low of 141,900 mt, declining from the previous week's level by 45% and from the four-week average by 51%, data showed.
In Brazil, trade association Anec estimated April soybean exports at 16.2 million metric tons, up 2.7 mmt versus the previous year's 13.5 mmt. May shipments are also expected to be higher at 14.5 mmt, compared with the prior year's 14.2 mmt.
In Asia, Malaysian palm oil futures edged lower on Friday and lost about 1.5% over the week as crude oil prices slumped and as weakening demand continued to weigh on sentiment.
The Bursa Malaysia Derivatives' June crude palm oil contract slipped for a third straight session, this time by 0.78% to 4,472 Malaysian ringgit ($1,143.88) per metric ton. The July contract eased by 0.79% to 4,505 ringgit/mt.
Malaysia has seen softer exports in the first 25 days of April, with cargo surveyors estimating a 15.7% to 16.8% month-over-month decline in shipments, largely due to logistical disruptions in the Middle East and as buyers exercised caution with buying due to high prices.
Palm oil discounts versus rival edible oils have thinned due to the recent price uptrend, resulting in a demand shift in India. Dealer estimates cited by Reuters showed a month-over-month drop in the country's palm oil purchases in April, and a rise in soybean oil and sunflower oil imports.
S&P Global said that price spreads between Asian crude palm oil and South American soybean oil have shifted from negative to positive territory. From discounts of $50/mt to $100/mt earlier in the year, palm oil has traded at premiums to soybean oil of $80/mt to $100/mt in March and April.
India typically buys soybean oil from Argentina and Brazil, and imports palm oil from Indonesia and Malaysia.
High freight rates, however, limited the arrival of South American soybean oil to Asia, with costs surging by about $130/mt in recent weeks, according to S&P Global.
Over the week, the local currency has strengthened 1.4% versus the US dollar, raising purchase costs to international buyers and further weighing on export demand.
A potential increase in production in April, following a seasonal low in Q1, may also pressure prices. Toward the end of the year, the output trend could reverse as the El Nino weather phenomenon develops.
Nonetheless, expected higher domestic consumption in Indonesia and Malaysia, with the implementation of higher biodiesel blending mandates, could provide some upside.
Malaysia will release market-relevant April palm oil data on May 11.
In the US, June ethanol prices on the NYMEX dropped for a fourth consecutive session, easing by a further 1.53% to about $1.94 per gallon on Thursday, amid weaker fundamentals and crude oil price losses.