Commodities
Biofuels Update: Chicago Soybeans Track Crude Oil Gains
Chicago soybeans firmed on Wednesday, tracking sharp gains in the crude oil market, but a lack of new sales to China and profit-taking limited price upside.The August soybean contract on the Chicago Board of Trade rose 0.74% to $12.28 per bushel. The corresponding August soybean oil contract steadied at 74.30 cents per pound.Rising global energy prices improve competitiveness of biofuels due to enhanced economics, supporting feedstocks such as soybeans.However, gains in the soybean complex were limited as traders took profits after prices reached new highs for the year and following an improved crop rating by the US Department of Agriculture.Limited Chinese buying also weighed on the market despite resumption of purchases in recent weeks.China has so far bought about 2 million metric tons of US soybeans this year, according to tallied data by S&P Global Energy CERA, still short of the 25 mmt annual pledge through 2028.Traders cited by S&P Global Energy said tariffs, currently at around 13%, are limiting Chinese buying activity, with only state-owned buyers making purchases. Traders are also doubtful that tariffs will be resolved in a planned US-China summit in September."Nevertheless, even without US soybeans, supply in China is unlikely to become tight over the course of the year, given ample Brazilian supplies," the research firm said.Offers for Brazilian cargoes remain generally lower than US cargoes, according to ADM Investor Services.In Asia, Malaysian palm oil futures were mixed on Wednesday, as soybean oil steadied and as a lack of firm exports kept traders on the sidelines.The Bursa Malaysia Derivatives' August crude palm oil contract fell 0.11% to 4,530 Malaysian ringgit ($1,107.01) per metric ton. The September contract gained 0.20% to 4,583 ringgit/mt.AmSpec Agri Malaysia reportedly estimated a 0.9% month-over-month decline in Malaysia's July 1-20 shipments. At the same time, Intertek Testing Services approximated a 4.1% rise."..the data divergence is notable, casting doubt on the sustainability of export momentum," price reporting agency MySteel said.In June, exports rebounded month over month but fell below the previous year's level, "due to softer oils and fats consumptions in major markets such as China and India amid the lingering impact of the West Asia conflict," according to the Malaysian Palm Oil Council."...near-term vegetable oil demand remains moderate across major importing countries," it said, noting the currently high stock levels in India, driven by weak demand due to inflationary pressure.Going forward, the market could see a recovery in Indian demand ahead of the Diwali festival and could receive a boost from Indonesia's 50% palm-based biodiesel blending and potential yield impact from the El Nino weather phenomenon.However, "although the development of El Nino suggests future production reduction risks, current fundamental pressures are significant, and a breakout trend is unlikely in the short term," MySteel said.The MPOC projects palm oil prices of between 4,400 ringgit/mt and 4,650 ringgit/mt in August, but soft demand and elevated inventories will likely cap further upside.Meanwhile, August ethanol prices on the NYMEX dipped 0.39% to $1.92 per gallon on Tuesday, as the market awaited a weekly production, exports and inventory report due Wednesday.
