Mumbai, May 14, (Commoditiescontrol):Soyoil futures on the Chicago Board of Trade (CBOT) declined on Tuesday, following the Biden administration's decision not to impose additional tariffs on imported Chinese used cooking oil (UCO), a potential substitute for U.S. soyoil.
July soyoil futures settled 1.75 cents lower at 43.40 cents per pound. Simultaneously, CBOT July soybean futures fell 5 cents to $12.14-1/2 per bushel, while July soymeal futures rose $6.80 to $373.30 per short ton.
The absence of UCO tariffs, contrary to earlier rumors that had boosted soybean oil prices, contributed to the downward pressure on soyoil futures.
Meanwhile, Brazil's national crop agency Conab revised its soybean production forecast upwards for the 2023/2024 cycle, projecting a harvest of 147.685 million metric tons, an increase of 1.16 million metric tons from its April estimate. However, Conab also lowered the yield forecast for Rio Grande do Sul due to recent severe flooding.
Traders are anticipating the release of the National Oilseed Processors Association (NOPA) report on Wednesday, which is expected to show a slowdown in U.S. soybean processing in April compared to the record crush in March.
Funds were net buyers of soymeal with 4000 contracts and net sellers of soybean and soy oil with 3500 and 6500 contracts.
Interestingly, Argentine soy oil displayed a basis of -430 (sellers) as compared to previous days -520, with corresponding FOB values at $862.02($880.76). On the other hand, Brazilian soy oil trading exhibited a basis of -370(-350), with FOB values at $875.25($918.24).
ICE canola futures fell on profit-taking and spillover weakness from U.S. soyoil futures. The benchmark July canola contract settled down $12.60 at $655.30 peR metric ton, while November canola fell $13.20 to $673.80 a ton.
Palm oil futures on the Bursa Malaysia Derivatives Exchange also experienced a sharp decline of 1.40% to 3,814 ringgit ($808.14) a metric ton during midday trading. The EuroNext August 2024 futures contract fell to Euro 477.50 per metric ton, a decrease of -7.25 euros.
Conversely, Dalian's most-active soy oil and palm oil contracts increased by 1.10% and 1.98%, respectively.
On tuesday US DC Court of Appeals' decision to uphold the Renewable Fuel Standard (RFS) renewable volume obligations (RVOs) for 2020-2022 is expected to significantly impact the soyoil market. By maintaining the mandated levels for renewable fuel blending, the ruling ensures sustained or increased demand for biodiesel, which is predominantly produced from soyoil.
In the short term, the soybean oil (soyoil) market appears oversold, potentially leading to a brief technical recovery in prices. However, this recovery may be short-lived due to several factors.
While the DC Court of Appeals' decision to uphold Renewable Volume Obligations (RVO) volumes could provide some support to soyoil prices, the Biden administration's decision not to impose tariffs on Used Cooking Oil (UCO) imports from China is likely to have a more significant impact, potentially negating the RVO factors. Furthermore, estimates for the National Oilseed Processors Association (NOPA) soybean crush report suggest an increase in soyoil stocks, which could further weigh on prices. Consequently, after a potential brief technical recovery, soyoil prices are expected to decline again.
(By Commoditiescontrol Bureau; +91-9820130172)
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