The Chicago soybean complex weakened on Thursday as prices moved in tandem with crude oil, but Malaysian palm oil diverged, gaining support from rising exports.
The July soybean contract on the Chicago Board of Trade ended a three-session rally slipping 0.97% to $11.21 per bushel. The July soybean oil contract dropped for a third straight session by a further 1.79% to 70.26 cents per pound in early trade.
Favorable weather in the US Midwest, supporting soybean planting, also weighed on prices. This added to a more relaxed sentiment regarding supply, following a record harvest in Brazil.
"With expectations of a bumper US crop compounded by strong South American harvests, the global soybean supply landscape is poised to become even more ample," price reporting agency MySteel said.
Hopes for Chinese demand failed to provide a sustained market boost, following talks that Sinograin was looking to secure US soybeans for late 2026 to early 2027 delivery.
On Wednesday, the US Department of Agriculture said that 372,000 metric tons of soybeans were sold but destinations were unknown, with 60,000 mt for delivery in the current marketing year, and 312,000 mt for delivery in the 2026/27 season.
"In the short term, prices are likely to oscillate between favorable US soybean export news and downward pressure from crude oil, and are expected to maintain a rangebound and weak-biased performance," MySteel said.
In Asia, Malaysian palm oil futures closed higher on Thursday due to a rebound in exports and a weakening of the local currency, despite declines in crude oil and rival soybean oil prices.
The Bursa Malaysia Derivatives' July crude palm oil contract was up 0.20% to 4,510 Malaysian ringgit ($1,113.72) per metric ton. The August contract edged higher by 0.11% to 4,544 ringgit/mt, as trading resumed after a public holiday.
Prices firmed as Malaysian ringgit weakened against the US dollar, boosting competitiveness of exports as it makes them cheaper to foreign buyers. The ringgit has so far eased more than 1% over the week.
Malaysian shipments also showed a recovery in the first 15 days of June, with cargo surveyors reportedly estimating a 9.6% to 23.8% month-over-month growth.
In top importer India, palm oil purchases are reportedly expected to increase to more than 600,000 metric tons this month, from around 549,000 mt in May, according to multiple media outlets.
In Indonesia, the government may scale back its proposed single-gate export policy following concerns from buyers and exporters, The Straits Times reported, citing officials familiar with the matter. The Indonesian government has yet to confirm this.
The country is set to roll out a higher palm-based biodiesel blending mandate of 50% next month, reducing exportable supplies. At present, the policy is set at a 40% blending ratio.
Supplies may further tighten as a developing El Nino weather phenomenon impacts yields.
Agronomist Lee Chin Tui, as cited by New Straits Times, said Malaysia's full-year palm oil production target of about 20 million metric tons may be challenging to achieve, and a Q3 benchmark of 1.8 mmt per month should be closely monitored.
Investment banks RHB and UOBKH expect the farming sector to receive a boost from rising palm oil prices due to these factors, as well as from easing export interference in Indonesia, Business Times reported.
Meanwhile, July ethanol prices on the NYMEX inched up 0.27% to about $1.84 per gallon on Wednesday, as domestic production eased while stocks rose slightly.
Data from the US Energy Information Administration showed that ethanol output for the week ended June 12 averaged 1.102 million barrels per day, down from the prior week's 1.108 mmbbls/d.
Domestic stocks grew week over week to 24.47 million barrels from 24.45 mmbbls. Exports, on the other hand, dropped to 126,000 barrels per day from 155,000 b/d.
In the long term, S&P Global Energy said that US ethanol demand for on-road transportation will likely halve to about 6.6 billion gallons by 2050, largely due to "mounting pressure from electric vehicle penetration, vehicle efficiency gains, and stagnating blend policy."