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US Biofuels Update: Soybean Oil Rises as Record June Crush Counters Export Weakness

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Biofuels feedstock futures closed mixed on Wednesday, with soybean oil finishing higher as record US soybean crushing and tighter oil inventories outweighed a pause in fresh export sales.

The Chicago Board of Trade August soybean futures contract closed 0.8% higher at $12.02 1/4 per bushel, while the CBOT August soybean oil futures contract settled 0.72% higher at 72.92 cents per pound.

The Nymex August ethanol futures contract settled 2.04% lower on Wednesday at $1.925 per gallon.

August soybean futures rebounded from early weakness to finish higher, DTN analyst Rhett Montgomery said.

The analyst attributed this to traders reacting to a stronger-than-expected National Oilseed Processors Association crush report, overcoming disappointment over a second straight session without fresh export sales.

While no new flash export sales were announced on Tuesday or Wednesday, the previous four-day stretch generated over 40 million bushels of sales and remains ahead of the typical new-crop export booking season in August and September, Montgomery said.

The NOPA report showed that members crushed a record 214.3 million bushels of soybeans in June, exceeding market expectations and pointing to an official US June crush near 219 million bushels, Montgomery said.

Montgomery said June could become the first marketing year since 2015 in which soybean crush exceeded May volumes, with year-to-date NOPA crush running more than 12% ahead of the same period a year earlier.

World soybean supplies remain comfortable in the near term, although weather over the next 30 to 60 days could quickly alter the outlook, while Brazil continues to hold a short-term export advantage, Montgomery said.

Soybean oil inventories fell to 1.5 billion pounds in June, below analysts' expectations of 1.653 billion pounds, as the US green diesel industry consumed a record volume of US soybean oil as feedstock, DTN analyst Dana Mantini said.

Mantini added that the US green diesel industry consumed a record volume of US soybean oil as feedstock, making the June NOPA report bullish for soybeans and soybean oil.

Strong crush margins are expected to support cash soybean prices into the initial harvest of the new crop, Mantini said.

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