Oil & Energy
Biofuels Update: Feedstock Futures Rise Amid Soaring Crude Oil Prices, Mounting Middle East Uncertainties
Biofuel feedstock futures rose slightly on Friday, tracking a rally in crude oil prices that boosted demand for biodiesel inputs, which are seen as a partial alternative.The May soybean contract on the Chicago Board of Trade was up 0.06% at $11.60 per bushel. The May soybean oil contract rose 0.07% to 71.66 cents per pound.As Middle East tensions continued to linger, crude oil prices remained elevated, with Brent crude at $104.66, increasing demand for biofuel alternatives, along with their various feedstock inputs.On the supply side, US soybean conditions looked upbeat, with 12% of the crop already planted, well ahead of the five-year average. The markets, however, are closely watching the upcoming US-China trade talks that are scheduled to be held next month, which is expected to be a major catalyst for demand, according to Trading Economics.The soybean crop in Argentina, another major supplier, is facing weather-related delays, and at the same time, 18 vessels at the country's Quequen port were held up due to a protest staged by a small group of truckers, according to ADMIS Research Team.In Asia, Palm oil futures in Malaysia edged higher on Friday, amid support from a weaker Ringgit and higher crude oil prices, which made biodiesel more attractive, alongside mounting El Nino risks and higher biodiesel blends.After easing on Thursday, the Bursa Malaysia Derivatives' May crude palm oil contract was up by 0.27%, trading at 4,517 Malaysian ringgit ($1,139.22) per metric ton. The June contract was up by a similar measure, at 0.29%, to 4,565 ringgit/mt.Both contracts were up nearly 2% this week, reversing two prior weekly losses.This decline on Friday, however, comes despite a weaker Ringgit, with the currency having lost 0.32% over the past week, and soaring crude oil prices, with Brent futures touching $105.98, according to Trading Economics.The Malaysian Palm Oil Council said on Friday that it expects prices to remain above 4,500 Ringgit/mt in the near-term, which it attributed to potential El Nino risks jeopardizing output.The council also highlighted Malaysia's move towards a richer biodiesel blend, towards B15 from the current B10, which it said could absorb an additional 1 to 1 and a half million tonnes of oil annually.Similar biodiesel programs across Indonesia and Thailand, with both countries increasing their blends, are expected to further tighten the markets in the near-term, the Council said.According to price reporting agency MySteel, with the situation in the Middle East unlikely to ease any time soon, and with crude oil prices having surged again, palm oil is taking on a more important role as a biodiesel feedstock, supporting prices.In the US, May-dated ethanol futures on the NYMEX were down on Friday, by 0.50%, trading at $1.98 per gallon, despite a growing ethanol blending push across several countries, alongside rising crude oil prices, making it an attractive fuel source for major energy-importing countries.In the week ended April 17, ethanol production in the US declined to 1.0 million barrels per day, from 1.1 mmbbls/d a week earlier, according to data released by the US Energy Information Administration.Exports grew week over week to 91,000 barrels per day from 81,000 b/d, according to the EIA, while stocks rose to 26.9 million barrels from 26.7 mmbbls.