Commodities
Biofuels Update: Chicago Soybean Complex Retreats on Improved Crop Ratings; Palm Oil Falls
The Chicago soybean complex eased on Tuesday as improved US crop evaluations exceeded market expectations.The August soybean contract on the Chicago Board of Trade softened 0.45% to $12.20 per bushel. The corresponding August soybean oil contract lost 0.23% to 74.51 cents per pound.The US Department of Agriculture reported that 66% of planted soybeans were in good-to-excellent condition as of July 19, up 1% from the previous week's rating and higher than analyst expectations based on a Reuters survey.The agency also reported that soybeans inspected for export dropped to 296,972 metric tons in the week ended July 16, down from 447,990 mt a week earlier and from 377,020 mt a year ago.For the current marketing year, export inspections stood at 38.6 million metric tons, down from the previous season's 46.8 mmt.Weaker crush margins also weighed on prices, following a $0.15 moderation to $3.07 per bushel, according to ADM Investor Services.In China, supplies of soybean oil remained ample from high domestic crush rates, "which leaves the market lacking proactive upward momentum," price reporting agency MySteel said."Unless US soybean oil achieves an effective breakout, the market is expected to remain in a narrow rangebound pattern," according to the firm.In Asia, Malaysian palm oil futures retreated on Tuesday as rival soybean oil eased and as traders took profits after prices reached near four-month highs.The Bursa Malaysia Derivatives' August crude palm oil contract dropped 0.72% to 4,535 Malaysian ringgit ($1,108.23) per metric ton. The September contract fell 0.74% to 4,574 ringgit/mt.Reports of mixed export trends in Malaysia also pressured sentiment. AmSpec Agri Malaysia reportedly estimated a 0.9% month-over-month decline in July 1-20 shipments. Intertek Testing Services approximated a 4.1% rise.In Indonesia, analysts expect that exports will decline as domestic consumption increases with the implementation of a higher 50% palm-based biodiesel blend.Nonetheless, the Coordinating Ministry for Economic Affairs, as cited by Antara, said that B50 will not reduce the country's palm oil shipments as the government seeks to maintain a balance between domestic and international trade.While Indonesia's exportable supplies remain uncertain, long-term supply tightening is still expected as hot and dry weather from a developing El Nino weather phenomenon will likely impact yields.Malaysia's meteorological agency told Reuters that record-high temperatures in the country, exceeding the 1998 record of 40.1 degrees Celsius, are likely next year as an El Nino episode peaks between March and May 2027.Since weather-related supply risks will largely impact 2027 yields, Malaysia's 2026 output could remain strong, potentially reaching the 20-million-ton mark, a Bloomberg Intelligence report said. This could bring the country's domestic stocks to a record high this year as exports remain below production levels.In the near term, bearish factors, mainly ample supply and weak demand, are expected to dominate the latter part of July, according to market intelligence provider SunSirs."Technical analysis indicates that palm oil prices remained at low-to-mid levels in early July, with room for further decline," the firm said, highlighting that "overall upward momentum is expected to slow" toward the end of the month.Meanwhile, August ethanol prices on the NYMEX rose by a further 0.65% to about $1.93 per gallon on Monday.