FINWIRES · TerminalLIVE
FINWIRES

US Biofuels Update: Soybean Oil Futures Follow Crude Oil Higher, Soybean Futures Drop From Profit-Taking

By

Biofuels feedstock futures closed mixed on Wednesday, with soybean oil finishing higher amid rising crude oil prices due to the uncertainty in the Middle East, while soybean prices were pressured by traders selling on the fact that China bought US soybeans.

The Chicago Board of Trade August soybean futures contract closed 0.04% lower at $11.93 1/4 per bushel, while the CBOT August soybean oil futures contract settled 3.29% higher at 70.85 cents per pound.

The Nymex August ethanol futures contract settled unchanged on Tuesday at $1.92 per gallon.

Rhett Montgomery, a DTN analyst, said that the argument for weather risk in markets remains valid for the time being, with hotter and drier conditions in the U.S. forecast to late July, and the European situation still challenging for developing spring crops.

On Wednesday, the US Department of Agriculture announced sales of 472,000 metric tons of soybeans for delivery to China. Of the total, 136,000 mt are for delivery during the 2025/2026 marketing year and 336,000 mt are for delivery during the 2026/2027 marketing year.

Corn, soybeans, and wheat futures paused their five-day rallies on Wednesday, in a classic example of "buying the rumor, selling the fact," Montgomery said after the USDA confirmed the rumored round of soybean sales to China on Wednesday morning.

"The soybean market faced profit-taking on Wednesday after hitting chart resistance at the $12.00 mark on both old and new crop contracts," he added.

The analyst said the soybean market still faces weather uncertainty through the second half of the 2026 growing season.

"Meanwhile, energy strength and sharply higher soybean oil futures were not enough on Wednesday to lift soybean futures, where near-term supplies remain comfortable across the globe," Montgomery said.

US weekly ethanol production, totaling 1.09 million barrels per day for the week ended July 3, dropped from the previous week's 1.11 million barrels per day.

Stocks at 23.9 million barrels, down from 24.7 million a week ago, the Energy Information Administration reported on Wednesday.

Related Articles

Commodities

US Oil Update: Futures Rally After US Launches Retaliatory Strikes, Revokes Iran Crude Sale Waiver

Crude futures rallied in after-hours trading on Tuesday after the US Central Command said it had launched attacks in response to Iran striking three tankers transiting the Strait of Hormuz, while the US revoked a waiver that had authorized Iranian crude sales.Front-month West Texas Intermediate crude futures advanced 5.1% to $72.05 per barrel, while Brent futures climbed 5.2% to $75.76/bbl.Soojin Kim, a research analyst at MUFG, said crude prices edged higher after renewed attacks on commercial vessels in the Strait of Hormuz highlighted persistent security risks.On Tuesday, the US Treasury Department revoked a waiver that allowed the sale of Iranian oil in response to attacks on tankers in the Hormuz, after reports of attacks on vessels near and around the strategic waterway revived fears of supply disruptions.The Treasury's Office of Foreign Assets Control on Tuesday issued a new General License X1, stating that no new transactions involving Iranian oil may take place on or after July 7.On June 22, General License X was issued in the wake of the peace agreement, allowing transactions for 60 days and valid through August 21.Additionally, the US Central Command said that it had launched a fresh wave of attacks on Iran as retaliation for the earlier attacks on shipping."US Central Command forces have begun launching a series of powerful strikes against Iran to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway," Centcom posted on X on Tuesday.Centcom added that the strikes were "in response to Iranian attacks on three commercial vessels that were transiting the Strait of Hormuz.""Iran's demonstrated aggression was unwarranted, dangerous, and a clear violation of the ceasefire," it added.As of Tuesday, a total of three tankers were struck by projectiles in the Strait of Hormuz, the UK Maritime Trade Operations said, with two fresh attacks on Tuesday targeting vessels transiting the strategic waterway that is central to the US-Iran negotiations. Another tanker had been attacked on Monday.Iran's Islamic Revolutionary Guard Corps attacked a liquefied natural gas carrier after ignoring warnings while passing through the Omani route, according to Iranian media reports.Qatar's foreign ministry spokesperson, Majed Al Ansari, said the targeting of the Qatari tanker near the Hormuz was an unacceptable attack on the security of international navigation and global energy supplies.Al Ansari called on Tehran to "immediately cease all practices that undermine regional security or threaten the safety of international maritime navigation." A Saudi-flagged crude oil tanker, Widian, was also damaged off Oman's coast.Saxo Bank strategists said oil prices rose after a Qatari LNG ship was struck by a projectile near the Omani coast as it exited the Strait, raising unease among shipowners while once again testing the US-Iran peace deal.Meanwhile, global crude prices are projected to face renewed downward pressure as crude production rebounds and trade flows via the strategic waterway recover following the US-Iran peace deal to end the Middle East conflict, according to the Energy Information Administration.The EIA in its Short-Term Energy Outlook slashed its Brent spot price forecast for Q3 to an average of $74/bbl, about $27/bbl lower than its previous outlook.The agency projected that US gasoline prices would average about $3.80 per gallon in Q3, down from over $4.20 per gallon in Q2. The decline is forecast to be driven by lower crude oil prices, which account for the largest share of gasoline production costs.The EIA said that the recovery in supply and the restoration of oil trade flows are expected to ease pressure on global inventories. The agency now forecasts global oil inventories to decline by 2.2 million barrels per day in Q3, lower than its previous forecast of over 7 million b/d.

Commodities

US Refiners Poised to Beat Q3 Estimates on Strong Product Margins, TPH Energy Says

TPH Energy Research expects US independent refiners to deliver stronger-than-expected Q3 earnings as gasoline and diesel margins remain robust, it said in a Tuesday note.TPH raised its average Q3 earnings per share estimate for the sector to $5.83 from $4.97, above the consensus forecast of $5.22 per share.TPH still expects earnings to remain below its Q2 estimate of $6.18 and the Street's $5.74.TPH said refining margins have started the third quarter strongly, supported by an unusual seasonal increase in US gasoline margins.TPH said its US gasoline margin indicator increased to $35 per barrel in Q3 from $28 per barrel in Q2, after adjusting for Renewable Volume Obligation costs and measuring against Brent crude.US gasoline inventories have fallen to five-year lows and stand 6% below the five-year average, while gasoline yields have remained about 3 percentage points below normal over the past two weeks as refiners favored diesel production, the brokerage said.Diesel margins also improved, with TPH's US futures indicator increasing to $49/bbl in Q3 from $48/bbl in Q2 despite the US-Iran peace agreement.Low inventories, Russian refinery outages and a steeper global cost curve continued supporting diesel markets.TPH said crude differentials have narrowed against Brent for several grades, including WTI-Cushing, Syncrude, Western Canadian Select at Hardisty, Western Canadian Select at Houston and Alaska North Slope, creating a modest headwind for refiners.Company-specific indicators also strengthened early in the quarter, with Valero Energy (VLO) up $7.86/bbl from the prior quarter, Phillips 66 (PSX) up $5.71/bbl and Marathon Petroleum (MPC) up $4.08/bbl, according to TPH.The firm said lower crude backwardation, wider octane spreads and cheaper tanker rates should improve capture rates. Backwardation indicates strong near-term demand or constrained spot supply, with futures prices trading below spot prices.However, weaker jet fuel margins relative to diesel, flat crude prices and a roughly $2/bbl increase in Renewable Volume Obligation costs will offset some of those gains.TPH expects Midwest ethanol margins to improve by about 3 cents per gallon from the Q2 on stronger co-product returns, while retail operations recover. Renewable diesel and polyethylene margins are expected to weaken.Analysts forecast the largest earnings upside versus consensus for Valero Energy, HF Sinclair (DINO) and Par Pacific Holdings (PARR), while maintaining estimates below consensus for PBF Energy (PBF) and CVR Energy (CVI).TPH expects refiners to increase shareholder distributions in Q3 after limiting returns in Q2 because of market volatility.The firm forecasts an average total capital return yield of 9% in Q3, up from 5% in Q2, led by Marathon Petroleum, Valero Energy, Par Pacific Holdings, HF Sinclair and Delek US Holdings (DK).

$CVI$DINO$DK$MPC$PARR$PBF$PSX$VLO
Commodities

US Natural Gas Update: Futures Edge Up on Southern Heat Wave

US natural gas futures made modest gains in after-hours trading on Tuesday as sentiment improved on forecasts indicating robust demand through mid-month.The front-month Henry Hub contract and the continuous contract both climbed 1.11% to $2.281 per million British thermal units.NatGasWeather.com forecasts "High" national demand over most of the next 15 days as a broad heat dome settles across the southern two-thirds of the US, bringing widespread highs in the 90s to low 100s degrees Fahrenheit, with temperatures reaching 111-115 degrees Fahrenheit across the Southwest deserts. Northern regions are expected to see more moderate temperatures.Market volatility has diminished significantly this summer, with natural gas prices trading in a relatively narrow range since late May despite persistently warmer-than-normal weather, according to Energy Buyers Guide. While temperatures have remained elevated, prolonged periods of extreme heat have failed to materialize, limiting cooling-related demand."With key fundamental drivers pulling the market in opposite directions, the neutral bias that has defined recent price action is likely to hold until a major catalyst tips the scales," Energy Buyers Guide said.On the supply side, BNEF data cited by Barchart showed Lower-48 US dry gas production was estimated at 110.2 billion cubic feet per day on Tuesday, up 0.4 Bcf/d from Monday and 1.7% higher than a year earlier.Energy Buyers Guide said production has eased from highs of about 112 Bcf/d reached last month, with the decline appearing to reflect voluntary output reductions in the South Central region as producers respond to persistently weak prices in the Permian Basin.The US Energy Information Administration on Tuesday raised its forecast for 2026 US dry natural gas production to 111.2 Bcf/d, up from its June estimate of 111.0 Bcf/d.Demand, however, remained relatively subdued. Lower-48 gas consumption was estimated at 75.3 Bcf/d on Tuesday, down 1.6 Bcf/d from the previous day and 4.0% below the same period last year.Celsius Energy estimated power-sector gas consumption, or power burn, at 42.3 Bcf on July 6, up 4.2 Bcf from the previous day and unchanged from the same day a year earlier. For the week ended July 6, average power burn was 40.8 Bcf/d, down 2.6 Bcf/d from a year earlier.Meanwhile, estimated net gas flows to US LNG export terminals were 18.1 Bcf/d on Tuesday, down 1.1 Bcf/d from the previous day and 7.6% lower than the prior week.