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Biofuels Update: Soybeans, Soybean Oil Diverge; Palm Oil Drops

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Chicago soybeans rose on Thursday as concerns over crop conditions grew with persisting elevated temperatures in the US Midwest, while soybean oil dropped for a fourth straight session as crude oil prices continued to decline.

The August soybean contract on the Chicago Board of Trade gained 0.53% to $11.39 per bushel in early trade. The August soybean oil contract declined 0.39% to 66.43 cents per pound.

Soybean prices also rose as data from the US Department of Agriculture showed that soybeans crushed in May grew year over year to 6.4 million tons from 6.1 mmt. However, the volume came in lower than April's 6.5 mmt.

The market was also optimistic about large purchases from China, despite ample supply in the country.

Price reporting agency MySteel said that soybean arrivals in China remain high, resulting in strong crusher operating rates and inventory build-up.

China, the largest buyer of Brazilian soybeans, has received about 71% of the country's soybean exports from January through April, trade data provider Datamar said.

Brazil has recently concluded a record harvest. It exported 14.0 mmt of soybeans in June, up from the previous year's 13.9 mmt, Datamar reported, citing Safras & Mercado vessel data.

Prices of South American soybeans have remained relatively stable in June despite fluctuations in Chicago soybeans, S&P Global said, citing "steady international demand, competitive export pricing and stable physical market fundamentals."

In Asia, Malaysian palm oil futures slipped more than 1% on Thursday, tracking losses in crude oil and soybean oil.

The Bursa Malaysia Derivatives' August and September crude palm oil contracts closed at 4,478 Malaysian ringgit ($1,102.09) per metric ton and 4,506 ringgit/mt, respectively.

Prices also eased as the Malaysian ringgit partially recovered from two sessions of losses, gaining 0.33% against the US dollar on Thursday and dampening attractiveness of exports due to resulting higher costs.

In June, Malaysian exports likely rose month over month between 10.6% and 11.1%, according to cargo surveyors. The industry body is set to release monthly data on July 10.

In Indonesia, the implementation of a higher biodiesel blend of 50%, or B50, has begun in line with the applicable regulations, energy ministry official Noor Arifin Muhammad told Reuters.

The government is currently preparing the revised biodiesel allocation to determine the volume of palm-based biodiesel that producers must supply to fuel retailers to produce B50, according to Indonesian Biofuel Producers Association vice chairman Catra De Thouars, as cited by the news agency.

The energy ministry had initially allocated 15.6 million kiloliters of biodiesel for 2026 to meet the previous B40 mandate.

Indonesia's expanding biofuel policies and weather-related supply risks are expected to support the palm oil market in H2, with analysts cited by The Star estimating prices of between 4,000 ringgit/mt and 4,400 ringgit/mt during the period.

Plantation consultant M R Chandran, as cited by The Edge Malaysia, forecasts Malaysian output to decline to 19.7 mmt this year from the 2025 level of 20.3 mmt. Indonesian production, meanwhile, could reportedly fall to around 51 mmt from last year's 51.7 mmt.

Meanwhile, August ethanol prices on the NYMEX declined for a third consecutive session on Wednesday, dropping by a further 0.13% to about $1.88 per gallon, as US production and inventories increased.

Data from the US Energy Information Administration showed that ethanol output rose to 1.12 million barrels per day in the week ended June 26, compared with the 1.09 mmbbl/d posted a week ago.

Domestic stocks stood at 24.69 million barrels, up from 24.59 mmbbls a week earlier.

Inventories grew despite a week over week rise in exports to 126,000 barrels per day from 121,000 b/d.

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