The Chicago soybean complex was mixed on Wednesday following the US Department of Agriculture's reports showing increases in US soybean planted acreage and domestic stocks.
The August soybean contract on the Chicago Board of Trade rose 1.31% to $11.39 per bushel in early trade. The August soybean oil contract dipped 0.88% to 66.34 cents per pound.
Soybean planted area in the US was estimated at 85.4 million acres, up 5% from the previous year, based on USDA data, while soybean inventories as of June 1 stood at 1.06 billion bushels, 5% higher than a year earlier.
The market is monitoring how elevated temperatures in the Midwest this week could impact crop conditions. As of June 28, planted soybeans in good-to-excellent condition averaged 65% across 18 US states, down versus the 66% recorded last week and a year earlier, according to USDA.
"In the short term, US soybeans have entered a weather-driven trading window, but expanded acreage and high inventories cap upside potential," price reporting agency MySteel said.
For soybean oil, prices fell as the US Energy Information Administration reported that the volume of the seed oil used in biofuel production declined to 1.22 billion pounds in April from 1.28 billion pounds in March.
Lower crude oil prices could also weigh on biofuel demand going forward, serving as a headwind to the soybean complex.
In Asia, Malaysian palm oil futures rose on Wednesday as exports grew and as Indonesia expanded its biofuel mandate.
The Bursa Malaysia Derivatives' August crude palm oil firmed 0.22% to 4,528 Malaysian ringgit ($1,114.39) per metric ton. The September crude palm oil contract gained 0.24% to 4,557 ringgit/mt.
A shipping survey agency cited by MySteel said Malaysian palm oil product exports for June grew 4.7% month over month to about 1.3 million metric tons.
Other cargo surveyors cited by Trading Economics estimated shipments for the June 1-25 period to have risen between 10.6% and 11.1% from a month earlier.
A weakening Malaysian ringgit supported the competitiveness of exports, by making them cheaper to foreign buyers. The local currency eased against the US dollar by a further 0.25% on Wednesday, following a 2.94% moderation in June.
However, demand for palm oil as a biofuel feedstock may dampen after crude oil prices dropped to pre-war levels following the US-Iran interim peace deal.
The recent declines in the energy market could also weigh on Indonesia's higher biodiesel blend mandate of 50%, or B50, rolled out today.
Lower crude oil prices coupled with stronger palm oil prices would require higher subsidies to sustain the B50 implementation to keep it competitive with fossil fuel diesel, according to analysts cited by Reuters.
The government subsidizes its biofuel policies through palm oil export levies, which, if increased, will pressure profits of farmers due to resulting lower prices for fresh fruit bunches, the Jakarta Globe reported, citing palm oil smallholder association Popsi.
Analysts also see a potential shift in trade patterns once exportable supplies from Indonesia decline with higher domestic biofuel use.
Supplies may further tighten going forward if a developing El Nino weather phenomenon curbs palm oil yields, although the impact is "not immediate," The Star reported, citing Ahmad Parveez Ghulam Kadir, Malaysian Palm Oil Board director-general.
The MPOB reportedly expects palm oil prices to average between 4,000 ringgit/mt and 4,300 ringgit/mt this year, as prices rose in H1 due to a bullish energy market.
Meanwhile, August ethanol prices on the NYMEX retreated by a further 0.13% to about $1.88 per gallon on Tuesday.
The EIA reported that the operable production capacity of fuel ethanol plants in the US decreased to 18.36 billion gallons per year in April from 18.39 bgal/year a month earlier.