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Biofuels Update: Stronger Crude Oil, Exports Lift Feedstock Futures

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Major biofuel feedstock futures firmed on Monday, supported by a rise in crude oil prices, which improves the economics of biofuel, and a rise in exports.

The September soybean contract on the Chicago Board of Trade rose 0.52% to $11.65 per bushel in early trade. The September CBOT soybean oil contract gained 0.94% to 68.88 cents per pound.

The US Department of Agriculture on Friday reported 238,000 metric tons of soybean sales to China for delivery during the 2026/27 marketing year, and another 286,097 mt to Mexico.

Chinese buying has recently picked up, supporting soybean prices, despite a reported 14.9% year-over-year decline in China's edible oil imports in H1, according to customs data cited by market intelligence provider SunSirs.

China's state-owned enterprise Sinograin will reportedly put another 516,000 mt of soybeans up for auction on Aug. 12, the third such move in recent weeks, to free up storage for arriving US cargoes.

Meanwhile, a shift to drier and warmer weather in the US Midwest, raising concerns over the soybean crop's critical pod filling phase this month, has also propped up prices, Trading Economics said.

Market attention is now expected to focus on the USDA's supply and demand estimates report, due on Aug. 12.

In Asia, Malaysian palm oil futures closed higher on Monday as rival soybean oil strengthened and as industry data showed further growth in exports in July.

The Bursa Malaysia Derivatives' September crude palm oil contract firmed 0.54% to 4,631 Malaysian ringgit ($1,132.08) per metric ton. The October contract gained 0.98% to 4,723 ringgit/mt, ending two sessions of losses.

The Malaysian Palm Oil Board on Monday reported that July exports grew 14.5% from a month earlier to 1.4 million metric tons, confirming growth estimates by cargo surveyors and analysts. This compares with May and June levels of 1.1 mmt and 1.2 mmt, respectively.

Shipments were supported as top buyer India began restocking ahead of festivities, with July palm oil imports surging 50% month-over-month to 733,000 mt, according to dealers cited by Reuters.

In China, import margins continued to improve, supporting future shipments, price reporting agency MySteel said.

However, palm oil price gains were capped as domestic stocks in producing regions remained elevated.

In Malaysia, inventories reached a five-month high of 2.6 mmt in July, as they grew by a further 3.3% from the June level of 2.5 mmt, MPOB data showed.

Higher stocks resulted from an increase in production during the peak season, which offset export demand growth. MPOB reported that output grew 9.4% month over month to 1.8 mmt from 1.6 mmt.

Fresh fruit bunch yields in the long term could decline due to El Nino-related supply disruption, supporting palm oil prices between 4,000 ringgit/mt and 4,500 ringgit/mt this year and in 2027, The Star reported, citing Rakuten Trade head of equity sales Vincent Lau.

Plantation margins are still expected to remain robust even if prices fall to around 3,800 ringgit/mt, Lau reportedly said.

Meanwhile, September ethanol prices on the NYMEX inched up by a further 1.42% to $1.97 per gallon on Friday, driven by bullish weekly exports and inventory data.

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