Commodities
Biofuels Update: Major Feedstocks Mixed; Soybeans, Palm Oil Head for Weekly Gains
Major biofuel feedstocks were mixed on Friday as crude oil prices retreated following sharp gains in the previous session, but soybeans and palm oil were set for weekly gains supported by a recovery in exports.The August soybean contract on the Chicago Board of Trade reached a new contract high as it rose by a further 0.16% to $12.39 per bushel in early trade, bringing weekly gains to almost 3%.The corresponding August soybean oil contract dropped 1.03% to 74.81 cents per pound, in line with crude oil prices, and steadied week over week.Soybean oil "lacks an independent fundamental driver of its own," price reporting agency MySteel said, and "it is expected to continue its relatively weak follow-through trend."For soybeans, recent sales provided support, with the US Department of Agriculture reporting that 1.5 million metric tons were sold for 2026/27 delivery in the week ended July 16. Of the total volume, more than 1 mmt were sold to China.Strong processing demand, driven by robust crush margins, also fueled the increase in soybean prices, according to Chip Nellinger of Blue Reef Agri-Marketing, as cited by AgWeb.Going forward, "attention should be paid to weather conditions in US soybean-producing regions and crude oil price movements," MySteel said.In Asia, Malaysian palm oil futures posted weekly gains amid signs of softening output and expectations of bullish Indian demand.The Bursa Malaysia Derivatives' August crude palm oil contract edged lower by 0.11% to 4,591 Malaysian ringgit ($1,121.92) per metric ton on Friday, but rose 1.37% over the week.The September contract inched up 0.30% to 4,677 ringgit/mt and posted a 2.45% weekly gain."..stronger international crude oil prices have bolstered expectations for biodiesel feedstock demand," MySteel said, although this still has to be reflected in physical spot transactions.On the supply side, Malaysia's output in the first 20 days of the month is estimated to have declined despite the ongoing peak production season, according to the firm.This improved near-term supply-demand balance, which is also currently supported by an anticipated recovery in Indian demand in Q3 ahead of Diwali.Along with the potential yield impact of a forecast strong El Nino weather phenomenon, these positive market drivers are pushing futures towards a "credible" breakout, Reuters reported, citing Sandeep Singh, director of Kuala Lumpur-based trading firm The Farm Trade.While Indian demand is set to rise, China's palm oil imports have declined in June to 176,769 metric tons, according to market intelligence provider SunSirs. The volume represents a 21.1% drop from a month earlier and a 49.5% plunge from the year-ago period.The trend "marks a clear contraction in import volume," SunSirs said, which "will effectively reduce domestic market supply and provide strong bullish support for palm oil spot prices."Meanwhile, August ethanol prices on the NYMEX strengthened 0.78% to about $1.94 per gallon on Thursday, driven by a surge in exports.