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US Biofuels Update: Soybean Complex Rises on US-China Trade Optimism, USDA Data

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Biofuels feedstock futures closed sharply higher on Tuesday, as the US Department of Agriculture released neutral-to-friendly data and President Donald Trump flew to China to meet with Chinese leader Xi Jinping.

The Chicago Board of Trade July soybean futures contract closed 1.13% higher on Monday at $12.26 per bushel, while the CBOT July soybean oil futures contract settled 2.20% higher at 75.36 cents per pound.

The Nymex June ethanol futures contract settled unchanged on Monday at $1.93 per gallon.

Rhett Montgomery, DTN analyst, said the soybean market received support from the USDA's monthly Crop Production and World Agricultural Supply and Demand Estimate Reports.

"Traders reacted bullishly to Tuesday's WASDE, which again keeps the soybean surplus right on the fence of a more bullish situation with production right now still dependent on a record-tying trend yield," Montgomery said.

In its report, the USDA reshuffled demand on the old crop balance sheet, cutting 10 million bushels from exports in 2025-26 to 1.53 billion bushels while increasing its crush outlook once again to 2.63 bb.

On Tuesday, the USDA estimated 310 mb of US ending soybean stocks for 2026-27, based on a 4.435-bb crop. US ending soybean stocks for 2025-26 were reduced from 350 mb to 340 mb, due to decreased exports but increased crush usage.

USDA projected 124.78 million metric tons of global soybean ending stocks in 2026-27, down less than 1% from 2025-26. USDA increased its estimate of world soybean stocks for 2025-26 from 124.79 mmt to 125.13 mmt, in line with expectations.

Globally, the USDA left its South American soybean production estimates unchanged.

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Market Chatter: US LNG Cargoes Sail to China for 1st Direct Deliveries Since February 2025

Three US liquefied natural gas cargoes are sailing to China, marking the first direct shipments between the countries in more than a year, according to a Reuters analysis on Tuesday, citing LSEG data.LSEG shipping data showed the vessels departed LNG export terminals in Louisiana last week and are scheduled to reach Tianjin between June 15 and June 20.The planned deliveries come as US President Donald Trump prepares to travel to Beijing this week for talks with Chinese President Xi Jinping.Since Trump returned to office in January 2025, no LNG vessel has shipped directly from the US to China because trade tensions pushed buyers to redirect cargoes elsewhere, the analysis said.Chinese importers holding contracts with US LNG producers sold many shipments to other countries over the past year as stronger global prices created profitable resale opportunities.The analysis cited EBW Analytics, which said China has relied more heavily on pipeline gas supplies from Russia and Central Asia rather than increasing purchases of US LNG.Columbia University researcher Erica Downs said lower inventories could encourage China to buy more LNG from the US, although cheaper pipeline imports and domestic gas production remain more attractive options."Beijing likely views the United States as an unreliable trade partner," Downs said.Umm Al Hanaya departed Cheniere Energy's (LNG) Sabine Pass export terminal on May 5, while Al Sailiya and Id'Asah left Venture Global's Plaquemines facility on May 8, the analysis added, citing LSEG data.If the vessels reach China, they would mark the first direct US LNG shipments to arrive since February 2025, when four cargoes reached Chinese ports before President Donald Trump began his second term.The US Department of Energy said two LNG vessels delivered small portions of US cargoes to China in 2025 and 2026 after unloading most of their shipments in Bangladesh.US DOE added 64 LNG vessels delivered cargoes to China from the US in 2024, compared with 52 in 2023, 30 in 2022 and a record 131 shipments in 2021, according to the analysis.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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Commodities

US Natural Gas Update: Futures Slide as Oversupply Concerns Return

US natural gas futures pared steeper losses in after-hours trading on Tuesday but still closed lower as traders refocused on oversupply concerns.Both the front-month Henry Hub contract and the continuous contract fell 2.61% to $2.834 per million British thermal units.Tuesday's price drop reversed part of Monday's more than 6% surge that had pushed prices to their highest levels since March. Monday's rally was fueled by forecasts for stronger cooling demand and expectations of tighter balances following the restart of a Texas LNG plant as well as continued support from the conflict in the Middle East. But analysts said the market's attention has shifted back toward ample supply and weakening near-term demand."Geopolitics has kept global energy markets jumpy and helped support gas earlier in the week, but follow-through has been elusive with national demand still choppy and supply holding near seasonal highs," Gelber & Associates said in a market note.It added that with LNG feedgas demand easing due to seasonal maintenance and domestic production remaining resilient, "the path of least resistance has shifted lower again as traders look past headline risk and back toward storage and the shoulder season reset."US natural gas demand fell from about 105 billion cubic feet per day earlier in the week to 98.7 Bcf/d on Tuesday, according to NRG Energy.Both heating and cooling demand may pick up in the near term. NatGasWeather said moderate-to-low demand is expected over the next five to six days as cooler-than-normal systems move across the Midwest and Northeast, bringing temperatures into the 30s and 40s Fahrenheit. While the West and Southwest are expected to see highs in the 90s and above 100 degrees Fahrenheit.Meanwhile, production remained steady. NRG Energy said dry gas output averaged roughly 107.2 Bcf/d over the past week with only modest fluctuations. The US Energy Information Administration on Tuesday raised its 2026 production forecast to 110.61 Bcf/d from 109.60 Bcf/d estimated in April.LNG feedgas flows averaged around 17 Bcf/d, but export demand is expected to soften in the coming weeks due to maintenance at Cameron LNG and lower flows to Corpus Christi and Freeport. Freeport LNG has also announced unplanned maintenance for May.Traders are also monitoring the gradual ramp-up of Golden Pass LNG and the expected startup of Corpus Christi Stage III Train 6 following regulatory approval.

Commodities

US Crude Inventories Fall for 4th Straight Week, API Says

Data from the American Petroleum Institute revealed Tuesday that US crude oil inventories decreased by 2.19 million barrels in the week ended May 8, following an 8.1-mmbbl draw the previous week and a Bloomberg-compiled survey estimate of a 1.65-mmbbl decline.The oil market now awaits the US Energy Information Administration's petroleum inventory report, scheduled for release on Wednesday.