Commodities
Biofuels Update: Soybeans Trade Above $13 a Bushel on Robust Chinese Demand
Chicago soybeans remained above $13 per bushel on Friday and were headed for a fourth solid weekly gain as strong demand, particularly from China, provided upward momentum.The November soybean contract on the Chicago Board of Trade was little changed at $13.16 per bushel in early trade and was set to rise more than 2% over the week.Chinese buyers have been buying US soybeans since the start of September. The US Department of Agriculture reported another 192,000 metric tons of sales on Thursday. This brings September purchases to 536,000 mt so far.China has already booked 14 million metric tons of its 25 mmt soybean pledge, AgWeb reported, citing Rich Nelson of agricultural research firm Allendale.Export numbers have been solid, while the yield outlook is weak, according to Allendale. It reportedly projects that the US soybean crop will decline 7% year over year to 4.52 billion bushels, following a survey across 25 states.Meanwhile, crude oil volatility and recent changes in biofuel policies weighed on soybean oil, with the October soybean oil contract weakening for a third straight session on Friday. It slipped by a further 0.93% to 68.98 cents per pound in early trade, bringing weekly losses to 2.6%.The US administration has expanded 2025 biofuel exemptions to help lower fuel prices, and plans to raise 2026 and 2027 biofuel requirements to compensate.In the near term, the soybean and soybean oil markets will focus on the USDA's supply and demand report, due on Sep. 11.Meanwhile, US soybeans are expected to trade between $13.00 and $13.20 per bushel, according to price reporting agency MySteel.In Asia, Malaysian palm oil futures closed higher on Friday, posting weekly gains of around 0.7%, as the nationwide roll-out of a richer biofuel blend offset weak export demand in Malaysia.The Bursa Malaysia Derivatives' October crude palm oil contract was up 0.15% to 4,775 Malaysian ringgit ($1,183.13) per metric ton. The November contract rose 0.51% to 4,929 ringgit/mt.The implementation of Indonesia's higher 50% biodiesel blend reportedly reached 75% to 80% of all fuel stations as of Aug. 31, with nationwide availability targeted by Oct. 1.Higher biofuel demand could reduce exportable supplies, especially as drought risks risks mount for supply. Indonesian palm oil association Gapki projected the nation's 2027 output would decline to 56.8 million metric tons from the 2026 outlook for 58.5 mmt, media outlets reported.In Malaysia, a developing El Nino weather phenomenon could also curb output, although current rainfall due to the monsoon may limit potential impact.August shipments from Malaysia reportedly fell between 6.5% and 14.9% from a month earlier, based on cargo surveyor estimates. Demand weakened as buyers turned to cheaper soybean oil, while a stronger ringgit further dampened palm oil's attractiveness.Subdued export demand could further lift domestic stockpiles, which have already risen to a five-month high in July. The Malaysian Palm Oil Board is set to release monthly data on Sep. 10.While there is near-term market support, "future focus should be on the realization of Indonesia's production figures, the implementation timeline of the B50 policy, and changes in Malaysian palm oil export data," MySteel said.Meanwhile, October ethanol prices on the NYMEX rallied for a fifth straight session on Thursday, rising by a further 0.48% to about $2.10 per gallon.Data from the US Energy Information Administration showed that inventories in the week ended Aug. 28 declined from a week earlier, despite lower exports and steady output.
