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US Biofuels Update: Chicago Soybean Oil Extends Gains on US-Iran Tensions

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Chicago soybean oil futures further strengthened on Monday, tracking crude oil price gains after the US and Iran launched tit-for-tat strikes.

The July soybean oil contract on the Chicago Board of Trade rose for a sixth straight session by a further 0.54% to 78.14 cents per pound, lifting the corresponding soybean contract by 0.46% to $11.92 per bushel in early trade.

The energy market firmed as persisting tensions in the Middle East heightened sentiments of tightening supply. This continued to support the biofuels market, which buoyed grains and oilseeds used as raw materials in biofuel production, according to a Singaporean trader cited by Reuters.

Expectations of additional Chinese demand for US soybeans also lent support, price reporting agency MySteel said, although a rapid pace of planting in the US Midwest added to supply upside and pressured prices.

Sluggish US export sales also weighed on prices, particularly as competing Brazilian and Argentine cargoes crowd the market. Brazil's record crop harvest has concluded, while Argentina's harvest has reportedly reached 84.6% completion.

MySteel projects Chicago soybeans to trade in a range of $11.70 per bushel to $12.00 per bushel in the near term, as smooth planting progress in the US and plentiful supply in South America counter positive demand sentiment from rising biofuel consumption.

In the US, July ethanol prices on the NYMEX dipped 0.49% to about $2.02 per gallon on Friday, driven by declining exports and increasing domestic inventories.

Data from the US Energy Information Administration showed that exports dropped in the week ended May 22 to 102,000 barrels per day, versus the previous week's 149,000 b/d.

US stocks grew week over week to 25.0 million barrels from 24.9 mmbbls, despite a softening in output to 1.09 million barrels per day from 1.11 mmbbls/d.

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