Biofuels feedstock futures closed sharply lower on Wednesday, with soybeans falling below $12 per bushel for the first time in many weeks due to improved crop weather.
The Chicago Board of Trade August soybean futures contract closed 2.89% lower at $11.77 per bushel, while the CBOT August soybean oil futures contract settled 2.39% lower at 69.07 cents per pound.
The Nymex September ethanol futures contract settled 1.03% higher on Tuesday at $1.96 per gallon.
The feedstock markets decoupled from a $5 per barrel jump in the crude oil market, following a series of surprise missile attacks by Iran targeting US bases in the Middle East on Tuesday evening.
Rhett Montgomery, a DTN analyst, said the soybean market dropped due to a less threatening crop weather outlook.
"After a brief rally on Tuesday in response to lower crop ratings in Monday afternoon's report, soybeans continued a sharply lower path on Wednesday and thus far for the week have posted a 60 3/4 cent loss for November futures.
Soybean oil futures completely ignored firm energy influence at mid-week, falling for a fourth straight session while the improved forecast for the first half of August also pressured prices, Montgomery said.
On Wednesday, the August BOHO spread reached $0.88 per gallon compared with $2.24 per gallon a month ago, prompting another heavy sell-off in RINs, according to Zander Capozzola, Principal Consultant at Argus Media Consulting Services.
The BOHO spread, reaching its lowest level since early April, is highly influenced by the recent soybean oil losses outpacing strengthening diesel prices.
The Energy Information Administration's Weekly Petroleum Status Report showed that for the week ending July 24, US ethanol production averaged 1.13 million barrels per day, up from last week's 1.09 mmb/d and above last year's 1.10 mmb/d.
Domestic ethanol inventories ended the week at 24.7 mmbbls, up from 24.5 mmbbls a week ago and equal to a year ago.