Commodities
Biofuels Update: Soybeans Slip as Soybean Oil, Palm Oil Rise
Chicago soybeans eased on Wednesday amid prospects of plentiful global supplies, while Chicago soybean oil and Malaysian palm oil recovered as crude oil prices rose.The August soybean contract on the Chicago Board of Trade fell 1.11% to $11.98 per bushel in early trade. The August CBOT soybean oil contract inched up 0.06% to 70.80 cents per pound.Despite lower crop ratings by the US Department of Agriculture and the emergence of Chinese demand, soybean prices weakened amid expectations of high supplies from South America.Brazilian exports this year are reportedly projected to reach a record 115.4 million metric tons based on estimates by trade association Abiove.For this month, the country's soybean exports are estimated to rise to 13.5 mmt, relative to the prior year's 11.9 mmt, according to the National Association of Cereal Exporters, Anec.Despite a record-high production, Brazilian soybean prices have remained firm resulting in an "unusual" market dynamic, S&P Global Energy said."Strong exports, expanding crush capacity, slow farmer selling and weather-driven support from Chicago have combined to prevent the large crop from weighing on prices," the research firm said.China remains a key buyer of Brazilian soybeans, accounting for about 71% of the country's shipments in H1, Brazilian agriculture media platform Portal do Agronegocio reported.Despite China's reduced buying appetite due to weak crushing margins, "cargoes from both Brazil and the US continued to trade, as China still maintains substantial forward demand coverage requirements for the coming months," S&P Global Energy said.In Asia, Malaysian palm oil futures rebounded on Wednesday as crude oil prices rose and as strong exports and long-term weather-related supply risks provided support.Following two sessions of losses, the Bursa Malaysia Derivatives' August crude palm oil contract edged higher by 0.37% to 4,557 Malaysian ringgit ($1,115.41) per metric ton. The September contract firmed 0.50% to 4,628 ringgit/mt.Malaysian palm oil shipments for the July 1-25 period reportedly grew between 8.1% and 15.9% from a month earlier based on cargo surveyor estimates. This followed a 6.2% month over month rise in June.A potential rebound in Indian demand ahead of Diwali could boost exports from Malaysia and Indonesia going forward.However, exportable supplies from Indonesia may be limited as the country progresses with its higher 50% palm-based biodiesel blending mandate, or B50.State-owned energy company Pertamina began the nationwide rollout of B50 and plans to distribute biodiesel at all fuel stations by Oct. 1, BioEnergy Times reported.To support the export market, Indonesia is reportedly seeking a US tariff exemption for palm oil exports, after the US imposed a 10% duty on nations associated with forced labor. Top palm oil producers Indonesia and Malaysia are among the countries that received the penalty in July.On the supply side, near-term production is expected to remain robust as palm trees remain in peak seasonal output, while long-term yields are likely to decrease amid expectations of a strong El Nino weather phenomenon toward the end of the year through early 2027.Price reporting agency MySteel sees market fundamentals as mixed, with near-term balance remaining loose while the long-term outlook appears tight due to the potential El Nino impact."...the scope for deep declines remains limited due to support from longer-term supply concerns," it said.Meanwhile, August ethanol prices on the NYMEX rose 1.04% to $1.95 per gallon on Tuesday as global energy prices remained strong.