Mumbai, 14 Nov (Commoditiescontrol): Chicago Board of Trade (CBOT) soyoil futures extended losses on Wednesday, shedding between 85 and 105 points as concerns grew over future biodiesel demand. Market participants cited speculation that Indonesia may delay its planned increase in biodiesel blending, while uncertainty mounted around the U.S. Environmental Protection Agency’s (EPA) policy direction under the incoming administration. President-elect Donald Trump’s EPA nominee, Lee Zeldin, known for his critical stance on the Renewable Fuel Standard (RFS), has added pressure on soyoil prices, further weighing on the market.
January 2025 soyoil futures closed down 1.05 cents at 45.18 cents, following Tuesday’s nearly 4% decline in soyoil and a 3% drop in Malaysian palm oil prices. On November 13, commodity funds were net sellers across the CBOT soy complex, reducing positions by 2,500 soybean, 3,000 soymeal, and 5,500 soyoil contracts, reflecting heightened caution among traders.
ICE canola futures also retreated, with January canola falling $9.30 to $649.10 per ton, a 1.4% drop, pressured by weakness in CBOT soyoil (-2.3%) and Malaysian palm oil (-3%). March canola similarly fell $9.60 to $661.50, holding some resilience against broader vegoil pressures. In Malaysia, palm oil futures declined for a second consecutive session, with the January contract on Bursa Malaysia down 42 ringgit (0.84%) to 4,984 ringgit per ton. Dalian soyoil and palm oil futures dropped 5.17% and 4.45%, respectively, amid weakening sentiment.
Indonesia’s palm oil fund agency, BPDPKS, has urged a review of the country’s biodiesel subsidy program as it faces potential budgetary strain. With the biofuel mandate set to increase from 35% to 40% (B40) in 2024, subsidy costs are projected to reach 47 trillion rupiah ($2.98 billion) by 2025, while anticipated revenues stand at just 20-21 trillion rupiah. The agency’s current balance of 32 trillion rupiah may be further stretched if crude oil prices remain low and CPO prices continue to climb.
The recent vegoil rally has been underpinned by increased demand for biofuel feedstock. However, rising vegoil prices and stagnant crude oil prices are expected to increase the subsidy burden for both the U.S. and Indonesian governments. The sustainability of vegoil’s uptrend will likely depend on crude oil price recovery and government willingness to bear escalating biodiesel subsidy costs.
(By Commoditiescontrol Bureau: 09820130172)
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