Volatile biofuels demand Is reshaping the price relationship between soybean and palm oils

and demand shocks affect the market. Soybean oil and palm oil together account for more than 60% of global edible oil supply and have long been considered close substitutes. Historically, their prices moved in tandem, maintaining a relatively stable spread. Since 2020, however, this pattern has broken down, suggesting that underlying market dynamics have fundamentally changed. One of the key drivers behind the divergence is the difference in production geography and policy frameworks. Palm oil production is heavily concentrated in Indonesia and Malaysia, where a growing share of output is absorbed by domestic food and biodiesel demand. Soybean oil production is more geographically dispersed, centered in the United States, Brazil, and Argentina, and is increasingly influenced by national biofuels policies that support domestic feedstock use. Analysts point to several distinct episodes of price divergence. In 2021, soybean oil prices surged well above palm oil prices amid rapid ...