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Key takeaways:
The most-active CPO futures contract for November on the Bursa Malaysia Derivatives fell by 0.79% to close at 4,493 ringgit ($1,063) per tonne and trading in a range of 4,475-4,568 ringgit per tonne.
The CPO opened higher on Monday, tracking gains in CME soybean oil futures from Friday August 22 after the US Environmental Protection Agency (EPA) announced Small Refinery Exemptions (SREs) supporting soyoil. Related vegoils also traded higher on Monday morning.
However, the CPO was unable to sustain the buying momentum and closed 22 ringgit per tonne lower at the end of the morning session before extending losses at market close.
The Malaysian ringgit strengthened by 0.56% against the US dollar, making the ringgit-linked CPO expensive to holders of the dollar, thus dampening buying interest.
On the DCE, the most-active palm olein futures contract was 36 yuan per tonne higher, or 0.38%, at 9,582 yuan ($1,337) per tonne. The equivalent soybean oil contract also rose 48 yuan per tonne or 0.57% to close at 8,488 yuan per tonne.
Rapeseed oil futures on the Zhengzhou Commodity Exchange edged lower, with the most-active January contract rising by 37 yuan per tonne to 9,891 yuan per tonne.
In the cash market, two vessels of olein were traded to China at $1,130 per tonne CFR for November shipment.
CPO discussions to India toward the close of the day were heard at $1,160-1,170 per tonne CFR west coast India (WCI) for September shipment. Discussions for the same shipment month on an east coast India (ECI) basis were at $1,150-1,165 per tonne.
In Indonesia, discussions for CPO were heard at $1,130-1,1,145 per tonne FOB for September shipment. Discussions for olein were also heard at $1,080-1,100 per tonne FOB Indonesia for the same month.
Cargo surveyor Intertek Testing Services (ITS) reported Malaysian exports in the first 25 days of August up by 10.89% to 1.14 million tonnes. Amspec logged an increase of 16.4% to 1.06 million tonnes compared with July.
On the production side, a survey by private brokerage UOB KayHian showed Malaysian output for the first 20 days of August rose by 1-5% month on month.
In the Americas, soyoil futures on the CME broke a two-session rally and fell on profit-taking after strong gains following the US EPA’s announcement on SREs on Friday. Stronger crude oil limited losses during the session.
The most-liquid December CME soyoil contract went down by 0.70% on the day to 54.93 cents per lb at 1pm US Eastern time.
Market participants adjusted positions after a rally in soyoil prices on Thursday August 21 and Friday, as the EPA decided on 175 SRE requests from 38 small refineries from 2016 to 2024. The agency granted full exemptions to 63 petitions and partial exemptions to 77 petitions.
The EPA reaffirmed its policy of returning Renewable Identification Numbers (RINs) previously used for compliance when a small refinery receives an exemption for a past compliance year.
Market participants also assessed a rumor that the EPA told lawmakers the agency planned on issuing a supplemental Renewable Volume Obligations (RVOs) proposal for 2026 and 2027.
The agency did not release any official RVO information in its Friday statement, nor did it clarify whether it will maintain the 50% RINs penalty for foreign feedstocks.
The EPA had proposed in June to raise the biomass-based diesel (BBD) mandate under the RVO from 3.35 billion gallons to 5.51 billion gallons in 2026.
Meanwhile, soymeal futures were mixed on the CME, with the short-term contract for September trading in negative ground.
Prices were pressured down by lower soybean prices, amid growing concerns on the absence of Chinese demand for US soybeans, as China purchased five cargoes from Brazil in the previous week.
Higher corn and wheat futures were in part supportive to the most-active October soymeal futures on the CME. These went up by 0.45% to $289.60 per short ton at 1pm US Eastern time.
In the physical market in South America, the soyoil basis for October loading in Argentina fell by 0.05 cents per lb, assessed at a discount of 3.55 cents per lb to October futures.
Meanwhile, in Brazil, the corresponding basis rose by 0.7 cents per lb compared with Friday, assessed at a discount of 2 cents per lb in Brazil to the corresponding futures.
On the soymeal front, Fastmarkets heard after its assessment on Monday rumors of paper trades for Brazilian soymeal, with October loading at a discount of $9 per short ton to October futures.
Also on Monday, another rumored paper trade for loading in October and November was heard at a premium of $8 per short ton to the corresponding futures.
The October basis in Brazil was assessed at a discount of $9.50 per short ton to October futures, down by $2 per short ton from the previous assessment.
Meanwhile, in Argentina the corresponding basis declined by $1 per short ton from Friday, assessed at a discount of $9.50 per short ton to the same futures contract.
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