1. Weekly News

Argentina

Mercosur-EU Agreement to Enhance Argentina's Soybean Oil Exports with Reduced Tariffs

The European Union-Mercosur agreement is expected to significantly impact Argentina's soybean complex, which constitutes 49% of its exports to the EU. Currently being ratified, the deal includes gradual reductions in export duties and the elimination of import tariffs, enhancing access to the European market. Export duties on the soybean complex will decrease to 14% over ten years, potentially freeing up USD 1.8 billion annually. Key products like soy flour, soybean oil, and biodiesel will benefit from tariff reductions. Specifically, tariffs on crude soybean oil for industrial use will fall to 0%, while refined and biodiesel oils will see reductions over five to eleven years. These measures are expected to strengthen Argentina's position in the European market, improving trade conditions for its soybean products.

Brazil

Brazil's Soybean Crush to Hit Record 57.10 MMT in 2025

Driven by higher soybean oil demand for biodiesel production, Brazil’s soybean crush is projected to reach a record 57.10 million metric tons (mmt) in 2025. Domestic soybean oil consumption is forecasted at 10.50 mmt, up from 9.90 mmt in 2024, supported by an increase in the biodiesel blend mandate from 14% to 15% starting Mar-25. Soybean meal production is also expected to hit a record 44.10 mmt, though exports may decline slightly to 22.90 mmt due to increased domestic consumption and rising stocks.

China

China's Soybean Oil Stocks Decline in W4 as Futures Strengthen

China's soybean oil stocks declined to 900,000 metric tons (mt) in W4, 50,000 mt lower than the previous month, but remain 70,000 mt higher year-on-year (YoY). Combined stocks of major vegetable oils, including soybean, palm, and rapeseed oil, totaled 1.85 mmt, down slightly by 10,000 mt from the prior week. Soybean oil futures are projected to strengthen in Q1-2025 due to weather-related supply disruptions in South America and anticipated domestic stock declines. This aligns with broader trends of reduced Chinese agricultural imports as reported by General Administration of Customs of the People's Republic of China (GACC), which fell 2.3% in volume and 15.6% in value in 2024.

Russia

Russia's Soybean Oil Exports Rise 2% YoY in 2024

In 2024, Russia maintained its position as the world’s third-largest exporter of vegetable oils, increasing exports by 8% YoY to 7.29 mmt, representing 8.5% of global trade. Soybean oil exports rose by 2% YoY to 691,000 mt, with India and Algeria as the top buyers, purchasing 288,000 mt and 220,000 mt, respectively. Soybean oil accounted for 6% of global soybean oil exports.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

Yearly Change in Soybean Oil Pricing Important Exporters (W4 2024 to W4 2025)

Argentina

In W4, Argentina's soybean oil prices slightly decreased by 2.86% week-on-week (WoW) to USD 1.02 per kilogram (kg) while marking a 21.43% increase YoY. The country's strong production capacity, bolstered by a 45% increase in output in 2024, supports both domestic consumption and export demand. As the world’s leading soybean oil exporter, Argentina’s prices are influenced by global market dynamics, particularly from key importers like India, China, and Bangladesh.

The recent price decline reflects the country's recovery from the drought, stabilizing domestic supply. Given Argentina's large share of global soybean oil exports, fluctuations in global demand and competition from producers like Brazil will continue to play a crucial role in shaping future price movements. The balance between domestic consumption and export demand will be key in determining price stability moving forward.

Brazil

Brazil's soybean oil prices remained stable at USD 1.20/kg in W4, reflecting a 3.45% YoY increase. This stability is supported by Brazil's record soybean production forecast for 2025, projected to reach 171.7 mmt. The increase is further bolstered by rising domestic soybean oil demand due to a higher biodiesel blend mandate. Domestic soybean oil consumption is expected to rise to 10.50 mmt, further supported by the record soybean crush forecast at 57.10 mmt.

The 3.6% increase in soybean oil production, reaching 11.45 mmt, along with projected export growth of 7.4% to 106.1 mmt, is expected to help maintain price stability in the short term. . However, the increase in domestic demand for biodiesel could potentially limit the available supply for export, influencing global price trends. The growing production capacity may help stabilize Brazil's domestic market, but exporters may face challenges in maintaining price competitiveness, particularly as stocks rise. Given these factors, soybean oil prices could experience upward pressure due to increased demand, while trade dynamics may influence future pricing trends in both domestic and international markets.

United States

The United States (US) soybean oil prices fell to USD 0.99/kg in W4, marking a 1.98% weekly decrease and a 5.71% YoY decline. This price drop comes despite strong export demand, especially from India, as the US has become a key supplier of soybean oil, driven by a surge in global palm oil prices. The United States Department of Agriculture (USDA) has adjusted its export forecast for 2024/25 soybean oil, predicting a 46% increase from previous estimates, driven by high domestic production and strong export sales.

However, the future sustainability of these exports is uncertain. While export projections have increased, the USDA's revision of soybean production down by 2.1% and the reduction in carryover stocks suggest tightening domestic supply. Additionally, ongoing uncertainties regarding biofuel policies, especially with the new administration, may lead to market fluctuations. Though current low prices have attracted buyers, particularly in India, the long-term outlook hinges on policy changes and global competition, which may exert upward pressure on US soybean oil prices in the coming months.

Netherlands

In W4, soybean oil prices in the Netherlands remained stable at USD 1.13/kg, showing a 24.18% YoY increase. This stability comes amid recent developments in the country's oilseed crushing sector. The recent acquisition of oilseed crushing plants in the Netherlands, including a soybean oil refining facility at the Port of Amsterdam, is expected to bolster processing capacity in the country. This expansion strengthens the position in key Northern European markets and optimizes logistics, potentially improving the efficiency of soybean oil processing. This increased processing capacity could influence future price movements by enhancing supply and distribution dynamics in the region. While current prices are stable, the increased processing capacity and improved logistical flows may enhance market supply, potentially lowering production costs and stabilizing or even reducing prices in the medium term.

3. Actionable Recommendations

Adapt to Increased Domestic Demand in Brazil

Brazil's projected record soybean crush and rising domestic soybean oil consumption due to the biodiesel blend mandate increase offer a strategic opportunity. Brazilian producers should prioritize aligning production strategies with this higher domestic demand while ensuring that enough supply remains available for export. Exporters could benefit from maintaining flexibility in their offerings to key markets like India, while simultaneously investing in infrastructure to manage the growing domestic market share without compromising export competitiveness.

Prepare for US Export Volatility

The US soybean oil market is expected to experience volatility due to tight domestic supplies, uncertainties in biofuel policies, and increased global competition. US exporters should closely monitor domestic production forecasts and engage in strategic partnerships with international distributors to mitigate risks associated with policy changes and supply disruptions. Additionally, focusing on the growing demand from India and other key importers can help maintain strong export sales, even amid fluctuations in domestic supply and policy uncertainty.

Sources: Tridge, UkrAgroConsult, Hellenic Shipping News, Rosng, 3tres3, Food Business News