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US Biofuels Update: Soybean Futures Gain as Soy Oil Extends Rally

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Biofuels feedstock futures closed higher on Thursday, with the soybeans and soy products finishing firm.

The Chicago Board of Trade July soybean futures contract closed 0.78% higher at $11.94 per bushel, while the CBOT July soybean oil futures contract settled 1.91% higher at 76.70 cents per pound.

The Nymex July ethanol futures contract settled 1.49% lower on Wednesday at $1.98 per gallon.

The White House confirmed media reports that the US and Iran have agreed to a memorandum of understanding for a 60-day extension of the ceasefire and to continue nuclear negotiations, but the agreement is awaiting presidential approval.

Dana Mantini, DTN analyst, said the soybean market was held up by technical support and soybean products.

"There was very little news to drive markets Thursday as traders anxiously await new China buying interest and a solid peace deal with Iran. Crude oil futures were just modestly higher on Thursday after sinking on news of a peace deal getting close on Wednesday," Mantini said.

He added that soy crush margins are the key "bullish driver in the soy complex with board crush premiums reported to be record large."

"Soybean oil surged Thursday for a third straight higher close. Also giving soybeans a boost is the higher inflation rate, reported to be 3.8%, and a three-year high," the analyst said.

On Thursday, the Energy Information Administration reported that for the week ending May 22, US ethanol production averaged 1.09 million barrels per day, below last week's 1.11 mmb/d and above last year's 1.06 mmb/d.

The four-week average output at 1.08 mmb/d was above 1.03 mmb/d during the same time last year.

Midwest ethanol production averaged 1.04 mmb/d, below 1.06 mmb/d in the previous week. Four-week average output at 1.02 mmb/d, compared with 970,000 b/d a year ago.

Domestic ethanol inventories ended the week at 25 million barrels, above 24.9 mmbbls a week ago and 24.3 mmbbls a year ago.

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