Major biofuel feedstock futures dropped on Friday, as crude oil prices slumped after Iran declared the Strait of Hormuz open.
The May soybean oil contract on the Chicago Board of Trade slipped 1.27% to 68.45 cents per pound in early trade, and the May soybean contract fell 0.45% to $11.58 per bushel.
Despite a potential reduction in biofuel demand due to weakening fossil fuel prices, signs of rising domestic consumption in the US could support the soybean complex, particularly with strong soybean crush volume recorded in March.
Stone X, as cited by Dow Jones, said the US market was being reshaped by domestic crushing and soybean oil demand, and was reducing its reliance on export markets.
However, Mark Soderberg of ADM Investor Services said that market participants would still turn their attention gradually to the Trump-Xi summit, as they await an indication of increased Chinese purchases.
On Thursday, the US Department of Agriculture reported that soybean export sales for the week ended April 9 dropped to a marketing-year low of 9.1 million bushels. Total export commitments have reached 1.4 billion bushels for the current season and remain 18% lower than the same point in 2025.
Meanwhile, in Brazil, exports for the year are expected to reach a record 113.6 million metric tons, suggesting an amply supplied market, according to industry group Abiove, as cited by Reuters.
In Asia, Malaysian palm oil futures slipped on Friday and posted another weekly drop, as crude oil and soybean oil eased amid weakening exports that weighed on sentiment.
The Bursa Malaysia Derivatives' May crude palm oil contract fell 1.28% to 4,386 Malaysian ringgit ($1,108.84) per metric ton, and the June contract edged lower by 1.21% to 4,422 ringgit/mt. Both contracts declined by around 2.5% over the week, on top of a 6% drop last week due to a moderation in crude oil prices.
Lower energy prices could reduce the competitiveness of biofuels, at a time when top palm oil producers are just about to begin higher biodiesel blending.
Indonesia, the world's top palm oil producer, is planning to raise its biodiesel mandate in H2 to 50% (B50) from the current B40 blend, a change that is likely to reduce exportable supply.
The second-largest producer, Malaysia, which is currently implementing a B10 program, is expected to begin a roll-out of B12 soon, with plans to increase that to B15 at a later time.
The third-largest producer, Thailand, has just begun introducing its B7 program, an increase from the previous B5.
Diesel supply has been heavily impacted by the Middle East conflict, prompting Southeast Asian palm oil producers to raise biodiesel blending ratios to help meet domestic market needs.
Malaysia's export market is expected to gain competitiveness, potentially boosting shipments. Its exports declined 34% in the first 15 days of April compared with the same period in March, due to high prices.
Key importers India and China are likely to defer purchases once the market stabilizes, The Edge Malaysia reported, citing CGS International.
Nonetheless, India may still prefer palm oil over other vegetable oils due to its cost competitiveness, according to the Minister of Plantation and Commodities Seri Noraini Ahmad, as cited by the news agency.
India may also start replenishing stocks ahead of seasonal demand, and after imports dropped to a three-month low in March, Trading Economics said.
In China, frequent cancellations of imports have lifted domestic prices, providing a "strong" floor for palm oil futures, according to Chinese price reporting agency MySteel.
In the US, the May-dated ethanol futures on the NYMEX slipped for a third consecutive session by 0.52% to $1.90 per gallon on Thursday, amid lower exports and stable output.