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US Biofuels Update: Futures Diverge With Falling Crude Prices Pushing Soybean Oil Lower

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Biofuels feedstock futures closed mixed on Tuesday, with the soybean market defying the sinking soybean oil market.

The Chicago Board of Trade July soybean futures contract closed 0.96% higher at $11.30 per bushel, while the CBOT July soybean oil futures contract settled 1.95% lower at 72.92 cents per pound.

The Nymex July ethanol futures contract settled 1.46% lower on Monday at $1.86 per gallon.

Crude futures dropped below $76 per barrel on Tuesday as the Middle Eastern peace deal is reportedly set to offer Iran some sanctions relief to sell oil, conditional on the reopening of the Strait of Hormuz.

Rhett Montgomery, a DTN analyst, said soybean futures reversed dramatically from early lows on Tuesday, trading at one point almost 20 cents higher.

"(The rally) was attributed to optimism that China will begin purchasing new-crop US soybeans, though nothing has been confirmed yet. July futures ultimately fell well below daily highs. However, Tuesday's bounce is still impressive considering the 2% drop in nearby soybean oil futures," Montgomery said in a daily note.

He added that domestic crush premiums continue to fade from late May highs, with product markets also facing selling pressure. "However, July board premiums of $4.40 per bushel remain historically high," the analyst said.

National Oilseed Processors Association reported on Monday a record May crush for members of 208.8 million bushels, though that was a bit disappointing compared to expectations.

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