MARKET DEVELOPMENT
Biodiesel demand drives up soybean prices
Biodiesel demand drives up soybean prices
28/5/07 (Bloomberg News) - CHICAGO: Soybeans rose to their highest price since 2004 on Friday, extending this month's rally, as production of crop-based fuels increased demand for vegetable oils while reducing supplies available for food production.
The European Union wants biodiesel to make up 5.75 percent of transportation fuels by 2010. Government subsidies helped lift U.S. biodiesel output to 250 million gallons, or 946 million liters, last year from 75 million in 2005.
Rising demand for fuel helped send soybean oil to 23-year high last week.
"Increasing biofuel demand is driving prices," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. Soybeans are the second-biggest U.S. crop behind corn.
Soybean futures for July delivery rose 7.25 cents to $8.125 a bushel on the Chicago Board of Trade, after reaching $8.1425 during the session, the highest price for a most-active contract since June 2004. Prices gained 2.5 percent last week, and have risen 39 percent in the past year, on expectations that U.S. farmers would plant a smaller crop.
Soybean oil futures for July rose 0.26 cent to 35.84 cents a pound in Chicago, after earlier reaching 36.05 cents, the highest for the most-active contract since June 1984. Soybean oil has jumped 43 percent in the past year.
In Malaysia, palm oil futures rose for a fourth straight session on increased demand from China, the world's biggest vegetable oil importer. The most-active contract rose to its highest weekly close since August 1998.
Palm-oil imports by China rose 27 percent to 1.6 million metric tons in the first four months of 2007 from a year ago, according to data issued by the country's customs office. Soybean-oil imports rose 16 percent to 792,380 tons.
Soybean prices also rose on speculation that increasing use of ethanol made from corn in the United States would require farmers to switch more acreage from soybeans to corn next year, said Jeff Hainline, president of Advanced Trading in Bloomington, Illinois.
The European Union wants biodiesel to make up 5.75 percent of transportation fuels by 2010. Government subsidies helped lift U.S. biodiesel output to 250 million gallons, or 946 million liters, last year from 75 million in 2005.
Rising demand for fuel helped send soybean oil to 23-year high last week.
"Increasing biofuel demand is driving prices," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa. Soybeans are the second-biggest U.S. crop behind corn.
Soybean futures for July delivery rose 7.25 cents to $8.125 a bushel on the Chicago Board of Trade, after reaching $8.1425 during the session, the highest price for a most-active contract since June 2004. Prices gained 2.5 percent last week, and have risen 39 percent in the past year, on expectations that U.S. farmers would plant a smaller crop.
Soybean oil futures for July rose 0.26 cent to 35.84 cents a pound in Chicago, after earlier reaching 36.05 cents, the highest for the most-active contract since June 1984. Soybean oil has jumped 43 percent in the past year.
In Malaysia, palm oil futures rose for a fourth straight session on increased demand from China, the world's biggest vegetable oil importer. The most-active contract rose to its highest weekly close since August 1998.
Palm-oil imports by China rose 27 percent to 1.6 million metric tons in the first four months of 2007 from a year ago, according to data issued by the country's customs office. Soybean-oil imports rose 16 percent to 792,380 tons.
Soybean prices also rose on speculation that increasing use of ethanol made from corn in the United States would require farmers to switch more acreage from soybeans to corn next year, said Jeff Hainline, president of Advanced Trading in Bloomington, Illinois.