Commodities
Biofuels Update: Major Feedstocks Mixed; Soybeans Up on Demand Hopes
Chicago soybean oil and Malaysian palm oil tracked softer crude oil prices on Wednesday, while Chicago soybeans extended gains for a fourth straight session on US-China trade optimism and a stronger demand outlook.The July soybean oil contract on the Chicago Board of Trade lost 0.07% in early trade to 75.31 cents per pound.Limiting losses was the US Department of Agriculture's report noting that US soybean oil demand will rise 7% in 2026/27 marketing year, due to stronger biofuel demand.The department projects demand for soybean oil as a biofuel feedstock will grow to 17.8 billion pounds in 2026/27 season, up 3.6 billion versus the previous marketing year.Meanwhile, the July soybean contract rose by a further 0.12% to $12.28 per bushel on Wednesday, as the market remained optimistic that China will commit to additional US soybean purchases following the Trump-Xi summit this week.Prices were also supported by a higher soybean crush outlook of 2.75 billion bushels in the 2026/27 season, up 120 million from the 2025/26 estimate, due to favorable crush margins and higher biofuel demand, according to the USDA.Soybean exports are also forecast to rise to 1.63 billion bushels, due to higher shipment volumes to China.However, "the US share of global trade is likely to continue its longer-term downward trajectory as large South American supplies, coupled with strong US demand, limit export growth," the USDA said.The USDA projects Brazilian soybean production will further grow to a new record of 186 million metric tons in the 2026/27 period, compared with the 2025/26 estimate of 180 mmt.In Asia, Malaysian palm oil eased further on Wednesday on crude oil price fluctuations and as both demand-side and supply-side pressures persisted.The Bursa Malaysia Derivatives' June crude palm oil contract slipped 0.92% to 4,409 Malaysian ringgit ($1,120.74) per metric ton. The July contract lost 0.96% to 4,438 ringgit/mt. Both contracts touched their lowest since mid-March earlier in the session.A month-over-month increase in Malaysian palm oil production and a decline in exports lifted stocks in April. Industry data showed that inventories rose 1.7% to 2.3 mmt, as output jumped 18.4% to 1.6 mmt, and as exports weakened 14.3% to 1.3 mmt.Malaysian inventories rose for the first time since December 2025, and remained significantly higher than the year-ago levels of 1.9 mmt. CIMB Securities, as cited by Business Today, projects stocks to further rise to 2.34 mmt this month.In May, export demand trends were mixed, with Intertek Testing Services estimating shipments to have risen 8.5% during the first 10 days of the month versus the same period in April, and AmSpec Agri Malaysia assessing a 10.8% decline, Trading Economics reported.In terms of prices, CIMB Securities reportedly said palm oil futures will likely remain elevated this month, largely due to expanding biofuel programs in Indonesia and Malaysia, geopolitical tensions in the Middle East, and El Nino-related supply risks.In the plantation sector, RHB Research, as cited by Business Today, said Q2 earnings would likely recover from Q1 lows as prices firm and as production increases.Meanwhile, in the US, June ethanol prices on the NYMEX recovered 1.81% to about $1.97 per gallon on Tuesday, ending a downward price movement that started last week.The USDA expects corn used in ethanol production will remain flat year over year at 5.6 billion bushels in the 2026/27 season.The US Energy Information Administration projects fuel ethanol output at 1.1 million barrels per day in 2026 and 2027. Production totaled 1.08 mmbbls/d in 2025.