Commodities
Biofuels Update: Soybeans, Soybean Oil Diverge; Palm Oil Up
Chicago soybeans rose further on Tuesday on positive demand sentiment, but soybean oil eased as crude oil prices dipped.The July soybean contract on the Chicago Board of Trade edged higher by 0.16% to $12.15 per bushel. The corresponding soybean oil contract slipped 0.25% to 75.44 cents per pound.The White House statement that China committed to buy at least $17 billion worth of US agricultural products annually through 2028, on top of the soybean commitments it made in October, buoyed Chicago soybean prices.Futures were up "despite the lack of confirmation from China on the White House fact sheet," showing a positive "buying mood," said Mark Soderberg of ADM Investor Services.Domestic inventories in China, however, remained high, with stocks at major domestic oil mills surveyed by MySteel reaching about 6.2 million metric tons in the 20th week of 2026, up 3.77% from a week ago and 4.91% from a year earlier.Before Chinese buying peaks, Soderberg said premiums of US soybeans over South American cargoes should narrow to boost competitiveness of US exports.A record Brazilian crop has continued to weigh on US soybean prices. With Brazil's soybean harvest almost completed, the country's export volumes are projected at about 16 mmt in May, up from 14.2 mmt in the year-ago period, trade data showed.In the US, soybean planting was also at record pace, reaching 67% in the week ended May 17. This compares with 63% in the previous year and 53% in the past five years, according to agriculture data.In Asia, Malaysian palm oil futures rose further on Tuesday, tracking overnight gains in soybean oil, despite a drop in crude oil prices and weakness in exports.The Bursa Malaysia Derivatives' June crude palm oil contract inched up 1.09% to 4,540 Malaysian ringgit ($1,141.19) per metric ton. The July contract climbed 1.08% to 4,571 ringgit/mt, to extend gains for a third straight session.Palm oil diverged from crude oil and firmed despite initial estimates that export demand dropped 16.5% month over month in the first half of May, according to data by AmSpec Agri Malaysia, as cited by Trading Economics.In India, top importer of palm oil, the government was considering to raise import duties on vegetable oil to help boost domestic industry, which could in turn weigh on Malaysia's and Indonesia's palm oil export markets, Bloomberg reported.A sustained softening of the local currency could help improve export attractiveness by making cargoes cheaper to foreign buyers. Malaysian ringgit has been declining against the US dollar over the last two weeks.On supply front, Malaysia's palm oil output for the May 1-15 period reportedly dropped 16.4% from a month earlier, as fresh fruit bunch yields fell 12.5% and oil extraction rates slowed 0.75%, MySteel reported, citing industry group data."The production decline exceeded market expectations," MySteel said. Analysts were expecting production would increase in the coming months, following a seasonal low in Q1 and prior to potential development of an El Nino weather phenomenon in Q3 or Q4.CIMB Research, as cited by The Star, projects fresh fruit bunch yields to rise between 13% and 15% in Q2. Affin Hwang Research reportedly expects output to gradually rise through Q3, although full-year production may remain largely flat or come in lower than 2025 levels.The research firms expect that palm oil prices will remain supported by biodiesel mandates and geopolitical tensions, the news agency reported.In the US, June ethanol prices on the NYMEX recovered 3.77% to about $2 per gallon on Monday, as the market reacted to positive US-China trade discussions.