BEIJING/PARIS: Chicago soyoil futures extended losses on Friday after plunging by their daily limit in the previous session as uncertainty over a U.S. biodiesel mandate hung over the market.
Prices for soybeans, the crop which produces soyoil, steadied after tumbling on Thursday, underpinned by lingering optimism over trade prospects following a China-U.S. tariff truce.
Chicago wheat ticked down from an earlier one-week high, while corn edged up for a third day as the cereal markets assessed brisk export demand and broadly favourable supply prospects.
The most-active soyoil futures on the Chicago Board of Trade were down 2.2% at 48.26 cents per pound by 1120 GMT. On Thursday, prices fell 5.7% to reach their daily trading limit as they retreated from an 18-month peak earlier in the week.
After optimism that proposed U.S. legislation would continue tax credits for biodiesel fuel, concerns over biofuel policy re-emerged with rumours that a target for renewable diesel volumes for next year will come well below the 5.25 billion gallons proposed by an alliance of oil and biofuel producers.
The biofuel sector is still awaiting clarification after the U.S. Environmental Protection Agency (EPA) said on Thursday it had sent its proposal on future biofuel blending mandates to the White House for review.
Chicago soybeans retreat from near 10-month highs as soyoil slumps; wheat rises
“Traders faced disappointment following the EPA’s announcement that nothing was decided, along with rumours of a reduction in mandates,” Argus analysts said in a note.
Soyoil also faced pressure from a slide in crude oil on Thursday, amid growing hopes for a U.S.-Iran nuclear deal, though crude prices steadied on Friday.
CBOT soybeans were up 0.2% at $10.53 per bushel. Soybeans had reached their highest since late July on Wednesday, buoyed by this week’s de-escalation in the U.S.-China tariff stand-off, before dropping 2.5% on Thursday.
CBOT corn gained 0.2% to $4.49-1/4 a bushel.
CBOT wheat edged down 0.3% to $5.31 a bushel. The price benchmark had rebounded from a near five-year low, helped by signs of increased export demand along with background concerns over dry, hot weather affecting crops in China.
U.S. export sales of wheat for the week ended May 8 totalled 804,800 metric tons, beating analyst expectations, according to the U.S. Department of Agriculture.
China issued a warning on Friday of a high risk of dry, hot winds next week that could damage winter wheat crops in major producing areas, including Henan.
But U.S. harvest prospects remained favourable after recent rain, with a crop tour in Kansas, the top U.S. wheat-growing state, projecting the highest yield in four years.
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