Mumbai, May 10, (Commoditiescontrol):CBOT soybean oil futures experienced a significant upswing today, closing at 44.44 cents per pound, a notable increase of 1.8 cents. Market analysts attribute this surge to heightened expectations of a substantial rise in soybean oil demand for biofuel production.Cues from other veg oil/oilseed futures such as CPO and Rapeseed remained mixed.
The U.S. Department of Agriculture (USDA) recently released its World Agricultural Supply and Demand Estimates (WASDE) report, revising the U.S. soybean crush projection to 2.43 billion bushels. This marks a substantial 125-million-bushel increase from the previous year, largely driven by the burgeoning biofuel sector's growing appetite for soybean oil as a renewable feedstock.
While the current market indicates a temporary dip in soybean oil's share in biofuel production due to the influx of Chinese used cooking oil, the impending possibility of tariffs on these imports is expected to reignite the demand for soybean oil.
Supporting this optimistic outlook, the USDA further projects that soybean oil consumption for biofuel production will skyrocket by 1 billion pounds, reaching a total of 14 billion pounds (6.35 million tonnes) by 2024-25.
Market sentiment data reveals a strong bullish trend for soybean oil, with net fund buying activities reaching 6000 contracts. This overwhelming optimism, coupled with the USDA's promising projections, has propelled CBOT's July soybean futures 10-1/2 cents higher to $12.19 per bushel.
The global market has also responded to this bullish sentiment, with ICE canola futures experiencing a notable surge and soybean oil prices on the Chicago Board of Trade increasing by 1.01%.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 21 ringgit, or 0.55%, to 3,810 ringgit ($804.31) a metric ton, the lowest close since mid-February.
Dalian's most-active soy oil contract and its palm oil contract both lost 2.04%.
Furthermore, the EuroNext commodities exchange reported the futures contract for August 2024 settling at Euro 482 per metric ton a increase of of 6.25 euros.
Market analysts predict that this upward trajectory in CBOT soy oil prices may face resistance around 46-47 cents per pound. A major trend reversal will be possible only if the U.S. government manages to stop Chinese used cooking oil imports by imposing a tariff on it. This could significantly increase the demand for soybean oil as a biofuel feedstock.
(By Commoditiescontrol Bureau; +91-9820130172)
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