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US Biofuels Update: Weak Soybean Oil, Absence of Chinese Demand Pressure Soybean Futures

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Biofuels feedstock futures closed lower on Wednesday, pressured by favorable crop growing conditions and a deep cut in the crude oil market.

The Chicago Board of Trade July soybean futures contract closed 0.83% lower at $11.07 3/4 per bushel, and the CBOT July soybean oil futures contract settled 1.64% lower at 69.43 cents per pound.

The Nymex July ethanol futures contract settled 0.55% lower on Tuesday at $1.82 per gallon.

Rhett Montgomery, a DTN analyst, said a lack of support from soybean oil and the absence of Chinese demand pressured the soybean market.

"After holding stubbornly on Tuesday to marginal gains despite bearish outside influences, soybean prices broke lower on Wednesday to the lowest close for the July contract since February 3," Montgomery said in a daily note.

He added that soybean futures remained caught between firm front-month meal prices, despite ending the session below its intraday highs, and continued weakness in soybean oil futures, which have now declined in seven of the past ten trading sessions.

Meanwhile, the US Department of Agriculture's daily export reporting system was again quiet on Wednesday, disappointing traders who had hoped for additional sales following China's first new-crop US soybean purchases announced last week

On Wednesday, the Energy Information Administration's Weekly Petroleum Status Report showed that for the week ending June 19, US ethanol production averaged 1.09 million barrels per day, slightly below last week's 1.10 mmb/d and above last year's 1.08 mmb/d.

The four-week average output at 1.10 mmb/d was unchanged from last year.

Midwest ethanol production averaged 1.04 mmb/d, equal to the previous week. Four-week average output at 1.04 mmb/d, compared with 1.05 mmb/d a year ago.

Domestic ethanol inventories ended the week at 24.6 million barrels, slightly above 24.5 mmbbls from a week ago and above 24.4 mmbbls a year ago.

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