Commodities
Biofuels Update: Major Feedstocks Slip Further on Declining Crude Oil
Major biofuel feedstock futures continued to track losses in crude oil on Tuesday, offsetting strong export demand data and prospects of lower production.The August soybean contract on the Chicago Board of Trade slipped 0.27% to $12.05 per bushel in early trade. The August CBOT soybean oil contract fell 0.69% to 70.97 cents per pound.Prices declined despite reports from the US Department of Agriculture that soybeans inspected for exports grew in the week ended July 23 to 348,850 metric tons from 319,022 mt a week earlier.The agency also said that private exporters sold 132,000 mt of soybeans to China and another 126,000 mt to unknown destinations for delivery during the 2026/27 marketing year.On the supply side, USDA reported that, as of July 26, 63% of planted soybeans were in good-to-excellent condition. This is lower than the previous week's 66% and the prior year's 70%.The figure came below market expectations of 64% and marks the lowest level for the same period since 2023, according to price reporting agency MySteel.A grains trader in Singapore, as cited by Reuters, said the lower US crop ratings supported prices, but weaker crude oil is providing downward pressure.Traders are also rushing to secure profits ahead of month end, resulting in bearish prices, agriculture intelligence provider DTN said.In Asia, Malaysian palm oil futures slipped further on Tuesday as crude oil and rival soybean oil declined, although losses were limited as exports grew and weather-related supply risks mounted.The Bursa Malaysia Derivatives' August crude palm oil contract inched down by 0.24% to 4,540 Malaysian ringgit ($1,111.25) per metric ton. The September contract dropped 0.54% to 4,605 ringgit/mt.Despite dampening competitiveness of biofuels due to falling crude oil prices, Malaysian palm oil exports remained resilient, with cargo surveyors reportedly estimating July 1-25 shipments to have risen between 8.1% and 15.9% from a month earlier.If the trend is sustained throughout the month of July, exports will continue its growth following a 6.2% month over month rise in June.A weakening in the local currency also supported exports by making them cheaper to foreign buyers. Malaysian ringgit eased against the US dollar by almost 3% in June and is on track for another monthly loss in July.Near-term fundamentals, however, remain loose as high inventories in producing regions persist.In the long term, market environment is expected to strengthen amid potential output cuts driven by the El Nino weather phenomenon, which is forecasted to peak between October 2026 and January 2027.The Malaysian Palm Oil Board, as cited by Focus Malaysia, projects fresh fruit bunch yields to drop by 10% to 14% in the first year, and by a further 3% to 4% in the following years, if dry weather conditions persist.MPOB reportedly projects Malaysian palm oil yields to decline 2% to 4% year over year in 2026, while prices could average from 4,300 ringgit/mt to 4,500 ringgit/mt. In the short term, it expects prices to remain above 4,000 ringgit/mt."...the market is likely to see weak rangebound trading under the pressure of sluggish domestic spot demand and long-position liquidation, maintaining a pattern of near-term weakness and far-term strength," MySteel said, although downside will be limited due to expectations of lower output.Meanwhile, August ethanol prices on the NYMEX dipped 0.77% to $1.93 per gallon on Monday, following a two-session rally.