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Biofuels Update: Soybean Complex Retreats on Fundamentals, Crude's Plunge; Palm Oil up

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The Chicago soybean complex eased on Tuesday amid looser demand and supply fundamentals, and as crude oil prices continued to decline on prospects of higher supplies from the reopening of the Strait of Hormuz.

The July soybean contract on the Chicago Board of Trade lost 0.87% to $11.09 per bushel. The corresponding July soybean oil contract fell 0.77% to 73.80 cents per pound in early trade.

Indicating weaker domestic demand, members of the US National Oilseed Processors Association reportedly crushed 208.8 million bushels of soybeans in May, down 1.4% from a month earlier and below expectations for 216 million bushels.

The average daily crush of 6.7 million bushels was also at an eight-month low, according to Mark Soderberg of ADM Investor Services.

Chinese buying also remained subdued, despite last month's US-China summit.

Soybeans inspected for export totaled 36.6 million metric tons in the current marketing period through June 11, down significantly from the previous year's 45.5 mmt, as per the latest data from the US Department of Agriculture.

On the supply side, the agency reported that soybean planting progress across 18 US states reached 95% as of June 14, up from 93% recorded a year ago, which was also the average pace in the last five years.

The USDA rated 66% of crops in good-to-excellent condition, higher than the previous week's 65% and comparable to the prior year's percentage.

In South America, supplies remained ample, with Brazil's 2025/26 record crop exceeding 180 mmt.

Soybean oil prices in the region dropped to record discounts in late May and early June as a result of rising supplies, while Chicago prices climbed to their highest levels since 2022 during the period, according to S&P Global.

"Participants said the divergence reflects a growing separation between a soybean oil market increasingly influenced by renewable diesel demand and biofuel policy in the US and a global export market still governed primarily by traditional vegetable oil fundamentals, including export demand, freight economics and competition from palm oil," S&P Global said.

In Asia, Malaysian palm oil futures rebounded on Tuesday, driven by a weaker local currency and a recovery in exports during the first half of June, despite lower crude oil prices.

The Bursa Malaysia Derivatives' July and August crude palm oil contracts rose about 2% to 4,501 Malaysian ringgit ($1,111.50) per metric ton and 4,539 ringgit/mt, respectively.

The Malaysian ringgit eased against the US dollar by 0.45% on Tuesday, to end a three-session rally. This makes exports cheaper to international buyers, potentially increasing the attractiveness of Malaysian shipments.

The country's export market is currently facing competition with rising numbers of Indonesian cargoes, as exporters rush to sell ahead of the full implementation of the new single-gate export policy next year.

Still, Malaysia reportedly logged a 9.6% to 23.8% month-over-month increase in shipments in the June 1-15 period, based on cargo surveyor estimates.

For July, the Malaysian Palm Oil Board lowered the crude palm oil reference to a level that keeps export duty at 10%.

In India, the government reportedly raised the base import price for crude palm oil by $14/mt and that of crude soybean oil by $4/mt, to reflect global price trends and foreign exchange rates.

Price differentials between the two vegetable oils have been narrowing in favor of soybean oil.

In May, India's palm oil imports reportedly rose to 551,000 metric tons from 513,403 mt the previous month, but volumes remained below average levels. Soybean oil purchases, on the other hand, jumped 38% month-over-month to 497,000 mt, the highest in five months.

On the supply side, "ample rainfall in Malaysia's producing regions is supporting palm oil's entry into a seasonal production increase cycle," according to price reporting agency MySteel.

However, analysts expect that a developing El Nino weather phenomenon will reduce supply relative to previous season's levels, buoying prices in H2 through 2027.

In the US, July ethanol prices on the NYMEX edged lower by 1.46% to $1.86 per gallon on Monday.

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