Strong Yuan, Weak Buyers, Tight Barrels

Commodity markets spent much of the session correcting lower as energy and agricultural markets paused following recent strength. ICE gasoil settled near $1,191.50/mt, down from recent highs around $1,300/mt, while Singapore 10ppm gasoil traded near $161/bbl and NWE ULSD cargoes corrected toward $1,168/mt. Palm oil also weakened with BMD down 38 ringgit to 4,400. The immediate market narrative centered on softer energy and profit taking, but several broader signals continue pointing in another direction.

Currency markets are creating a very unusual picture. The Chinese yuan strengthened materially over the past year with USD/CNY near 6.79, roughly 5.8% stronger year on year. Normally a stronger yuan improves China's purchasing power and supports imports. Yet U.S. agricultural flows remain sluggish. At the same time Brazil raised its 2025/26 soybean crop estimate again to a record 180.13 MMT with exports increasing to 116 MMT. Despite a stronger Chinese currency and larger Brazilian supply, U.S. soybean exports continue lagging expectations.

CNY

Outside China, the story shifts toward weaker importer currencies. India's rupee has weakened approximately 10.6% year on year, Indonesia's rupiah about 5.2%, and the Philippine peso around 11% weaker. Brazil is the exception, with the real strengthening toward 5.00 per dollar but then it is an exporter. The broader trend still points toward reduced purchasing power across several major commodity importing countries in Southeast Asia. Palm weakness appears consistent with this picture. BMD palm at 4,400 ringgit and CPO in dollar terms down approximately $8 on the day fit an environment where weaker Asian currencies are making imports more expensive.

India Rupee

There are also signs that trade tensions continue operating below the surface despite improving rhetoric. Reports emerged that China halted export clearances for hundreds of U.S. beef plants after expectations had built around licensing approvals. While soybeans remain the larger trade flow for agricultural markets, these actions suggest that the U.S.-China relationship remains tactical rather than normalized. Stronger currency alone does not automatically create stronger imports when political considerations remain active.

In biofuels and North West Europe, the correction in gasoil generated support for relative biodiesel values. FAME 0 closed around $1,462/mt with premiums near $270.50 over gasoil while RME finished near $1,521/mt with premiums around $329.50. UCOME remained near $1,588/mt with UCOME versus gasoil near $396.67/mt. Renewable diesel remained elevated with HVO Class 2 near $2,992.72/mt and escalated values around $1,701.93 versus gasoil. Despite weaker outright energy prices, biofuel structures remain relatively firm.

Palm and soybean oil pricing also reflect the current dislocation. West India CPO swaps traded around $1,231 to $1,241/mt for July while soybean oil swaps were around $1,261 to $1,271/mt. The SBO premium Vs Palm oil remains at +477 but considering current RIN values and U.S. policy support it should be higher. D4 RINs continue trading above $2.05 with December values near $2.07. Those remain historically elevated levels and continue supporting renewable fuel economics.

BOPO

Today's correction in energy screens may be masking a much tighter underlying balance. Combined U.S. transport fuel inventories including gasoline, distillates and jet fuel have fallen from approximately 433 million barrels in early 2026 toward 362 million barrels by Week 19, a draw of around 71 million barrels and roughly 23 million barrels below the five year average. Total U.S. liquids including the Strategic Petroleum Reserve also declined from approximately 1.72 billion barrels toward 1.62 billion barrels over the same period, a reduction approaching 100 million barrels.

This becomes increasingly difficult to reconcile with current market pricing. Markets appear focused on daily liquidation and macro headlines while the physical system continues removing barrels. Historically inventory declines of this magnitude tend to reappear later through stronger cracks, tighter timespreads and eventually higher outright prices. The current weakness in gasoil, palm and soybean oil may therefore represent a temporary adjustment in paper markets rather than a loosening of the underlying balance.