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Biofuels Update: Soybean Futures Rise in Early Trade to 7-Week Highs

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Biofuels feedstock futures edged higher in early Wednesday trade with soybean prices marking a seven-week high buoyed by reports of new Chinese purchases of the US crop.

The August soybean contract on the Chicago Board of Trade climbed 0.46% to $11.99 per bushel in early trade, while the August soybean oil contract gained 2.38% to 70.22 cents per pound.

Earlier in the session, soybean futures climbed above the $12 level for the first time since late May, boosted by renewed Chinese purchases from the US and higher crude oil prices, Trading Economics said.

Escalating tensions in the Middle East boosted oil prices, which in turn supported soybeans as they are used as a biofuel feedstock.

China reportedly procured at least 6-7 cargoes of US-origin soybeans totaling about 330,000 metric tons on Monday, according to a Feedlot report published by UkrAgroConsult on Tuesday.

The cargoes are scheduled to be shipped between September and November from US Gulf of Mexico and Pacific Northwest export terminals, the report said, citing several traders, buyers, sellers, and Asian market analysts.

"Traders now await Friday's USDA WASDE report, which is expected to show 2026/27 soybean ending stocks rising to nearly 340 million bushels after the USDA increased planted acreage estimates," Trading Economics said.

Meanwhile, August ethanol prices on the Nymex were relatively unchanged on Tuesday, settling at $1.90 per gallon.

In Asia, Malaysian palm oil gained over 1% amid firmer prices in rival edible oil markets in Dalian and Chicago.

The Bursa Malaysia Derivatives' August crude palm oil contract rose 1.24% to 4,572 Malaysian ringgit ($1,121.41) per metric ton, while the September contract rose by 1.36% to 4,609 ringgit/mt.

Prices were supported by a weaker ringgit, stronger edible oil prices in Dalian and Chicago, and expectations of strong export demand, Trading Economics said.

Rising crude oil prices, driven by the latest US airstrikes on Iran and renewed sanctions on its oil exports, also made palm oil more attractive for biodiesel production.

The US Department of Agriculture has lowered its outlook for Malaysian palm oil output for the 2026/27 marketing year to 19.7 million mt, with dry weather linked with El Nino expected to impact production especially in Q3 and Q4 of the marketing year, according to a UkrAgroConsult report on Tuesday.

The USDA also expects a rise in domestic demand in Malaysia due to the government's decision to introduce its mandatory B15 biodiesel blend on Peninsular Malaysia last month, the report said.

Fundamentally, palm oil remains pressured by a surge in overseas and domestic production, inventories at near-three-year peaks, and weaker demand due to palm oil's shrinking price advantage over soybean oil, Mysteel said Wednesday.

"End-users are purchasing only for essential needs, and market liquidity remains thin. Overall, the rebound lacks sustained momentum, with futures likely to fluctuate in a low range in the short term and spot basis expected to remain weakly stable," it added.

The Malaysian Palm Oil Board's monthly report is due later this week.

Cargo surveyors expect an up to 11.1% over the month rise in palm oil shipments for the July 1-July 5 period.

June exports also rebounded from the May slump. However, overall demand likely remained below supply in June, bringing inventories to a record high for the month, according to a Reuters survey.

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