Chicago soybean oil extended losses on Monday as crude oil prices weakened, while soybeans were steady to higher as Chinese buying continued to provide support.
The September soybean oil contract on the Chicago Board of Trade fell 2.38% to 67.70 cents per pound in early trade. The corresponding soybean contract was up slightly by 0.04% to $12.25 per bushel.
The US Department of Agriculture on Friday reported another 712,000 metric tons of soybean sales to China, and sales of 720,000 mt to unknown destinations. Sustained Chinese buying has been providing upward momentum to the Chicago soybean complex.
US soybean cargoes were also expected to be below Brazilian offers by $0.35 to $0.50 per bushel through the end of 2026, according to ADM Investor Services, supporting US export competitiveness and boosting market sentiment.
Meanwhile, the Pro Farmer's crop tour forecasts US production at 4.57 billion bushels, higher than the USDA estimate by 53 million bushels. Analysts expect the impact on prices to be limited considering the relatively small divergence.
The market will likely shift attention to weather patterns, which will largely dictate crop growth in the coming months, according to Pro Farmer economist Lane Akre, as cited by AgWeb.
In the near term, "CBOT soybeans are expected to maintain a range-bound pattern at elevated levels," price reporting agency MySteel said.
In Asia, Malaysian palm oil futures pared the previous session's gains and retreated from 20-month highs on Monday, amid profit-taking and weaker crude oil and soybean oil.
Ending a five-session rally, the Bursa Malaysia Derivatives' September crude palm oil contract fell 1.48% to 4,720 Malaysian ringgit ($1,168.03) per metric ton. The October contract closed lower by 1.52% to 4,859 ringgit/mt.
Preliminary estimates by cargo surveyors also reportedly showed a 5.5% to 13.2% month-over-month decline in Malaysian shipments for the period Aug. 1-20, raising concerns over near-term demand.
A firmer local currency has dampened export competitiveness, as it makes exports more expensive for foreign buyers. The Malaysian ringgit has so far strengthened against the US dollar by more than 1% this month.
In top buyer India, festive-driven demand could drive palm oil purchases, but expectations of higher soybean imports in August could cap volumes. India's soybean oil purchases are reportedly expected to reach 620,000 metric tons this month, up 46% from the current marketing year's monthly average.
In Indonesia, buyers are reportedly scaling up purchases ahead of B50's full implementation in October, following a three-month transition period. The expanded biofuel policy could reduce exportable supplies as domestic consumption increases.
Analysts expect the supply and demand balance to tighten going forward, largely due to the El Nino weather phenomenon. There is a more than 90% probability that the phenomenon will manifest in the 'very strong' category in Q4, the Malaysian Meteorological Department reportedly said.
Prices for the remainder of the year are projected to remain firm and range from 4,600 ringgit/mt to 5,000 ringgit/mt, Oils & Fats International reported, citing SD Guthrie global trading chief executive Sandeep Bhan.
In the US, September ethanol prices on the NYMEX rose by a further 2.17% to $2.12 per gallon on Friday, supported by an extension of the waiver for E15 sales through Aug. 31.
E15 is a gasoline grade blended with 15% ethanol, a richer mix compared with the standard 10% blend.