Commodities
Biofuels Update: Major Feedstocks Firm as Crude Oil Prices Surge
Major biofuel feedstocks rose on Thursday following a jump in crude oil prices and amid prospects of improved export demand.The August soybean contract on the Chicago Board of Trade reached a new contract high as it inched up 0.69% to $12.41 per bushel in early trade. The corresponding August soybean oil contract climbed 1.06% to 76.28 cents per pound.Competitiveness of biofuels over fossil fuels has improved after crude oil prices surged on intensified tensions in the Middle East, potentially prolonging supply disruptions in the Strait of Hormuz.Chinese buying also supported prices, with the US Department of Agriculture confirming that China bought 264,000 metric tons of US soybeans this week, following a series of purchases a week earlier.Imports continued despite ample supply availability of soybean oil in China and subdued domestic demand, according to price reporting agency MySteel.Weather patterns also contributed to the price movement, as prospects of hot and dry weather could impact crop growing conditions and affect supply sentiment.In Asia, Malaysian palm oil futures firmed on Thursday, moving in tandem with crude oil and soybean oil, amid expectations of higher Indian demand in Q3 ahead of festivities.The Bursa Malaysia Derivatives' August crude palm oil contract gained 1.46% to 4,596 Malaysian ringgit ($1,123.14) per metric ton. The September contract climbed 1.75% to 4,663 ringgit/mt.India's imports of edible oil are expected to hit 1.5 million tons a month between July and October, Reuters reported, citing industry sources.The Malaysian Palm Oil Council also projects that Indian demand will rebound from July through September as suppliers restock ahead of Diwali.A potential rise in imports could deplete currently elevated inventories in producing countries, where stocks have built up due to high seasonal production and weak demand.However, price gains were capped as Malaysia's recent export levels declined.Cargo surveyors reported that July 1-20 shipments ranged from a 0.9% decline to a 4.1% increase from a month earlier. This compares with a 4% to 12.4% month-over-month rise during the July 1-15 period."This indicates a marked weakening in export demand during the latter part of the month," market intelligence provider SunSirs said.In August, prices are expected to trade between 4,400 ringgit/mt and 4,650 ringgit/mt, the MPOC said, but subdued demand and persisting high inventories will likely limit price upside.Meanwhile, August ethanol prices on the NYMEX steadied at $1.92 per gallon on Wednesday, as exports surged while production and stocks grew.Data from the US Energy Information Administration showed that, for the week ended July 17, exports almost doubled to 158,000 barrels per day from 81,000 b/d a week earlier.Domestic production, meanwhile, rose week over week to about 1.1 million barrels per day from 1.0 mmbbls/d.Despite a rebound in exports, stocks grew to 24.5 million barrels from the previous week's 24.4 mmbbls.
