In W32 in the soybean oil landscape, soybean oil futures on the Chicago stock exchange experienced fluctuations during the week. On Monday, August 7, soybean oil futures for Sept-23 delivery closed down 2% to USD 64.08 per pound (lb). This decline was attributed to rain over the weekend and favorable weather in August, leading investment funds to reduce their long positions. Factors such as low demand for American grain and the recent devaluation of the Brazilian real against the United States (US) dollar also contributed to the pressure on soybean oil prices. On Tuesday, August 8, soybean oil futures experienced a slight decrease of 0.16% to USD 63.98/lb due to expectations of a reduction in yield based on the United States Department of Agriculture (USDA) report to be released on Friday. Analysts predict a decrease in the US yield estimate from 3.5 to 3.44 metric tons (mt)/hectare (ha). Conversely, on August 9, soybean oil futures rose by 0.36% to USD 64.21 due to new sales to China, totaling 1.095 million metric tons (mmt) since July 24. The market also remained cautious as it awaited the impending supply and demand report. Finally, on Thursday, August 10, the contract closed with a marginal decline of 0.05% at USD 64.18/lb.
In July, the Food and Agriculture Organization (FAO) reported a notable surge in the vegetable oil price index, reaching 129.8 points, which signifies a 12.1% month-on-month (MoM) rise. This marks the first increase in seven months following a period of decline. The prices of palm, soybean, and rapeseed oils escalated due to concerns about unfavorable harvest forecasts in major producing nations.
Argentine soybean oil exports in the 2022/23 season dropped by 12% year-on-year (YoY) due to the impact of the previous summer's drought. Meanwhile, Brazil has doubled its exports over the past two years. Two years ago, Argentine soybean oil exports were significantly higher than Brazilian exports by more than 400%, but now the difference is only 57%. Despite production challenges, the FOB price of soybean oil in Argentina has risen by around 20% since early June.
Russia is expected to set two records in the soybean oil market in the current season (from September 1, 2022, to August 31, 2023). Production is anticipated to reach around 950 thousand mt, and exports are projected to reach about 725 thousand mt, both of which would be record highs. Among the importing nations, Algeria is the leading purchaser of Russian soybean oil, followed by Egypt, Iran, India, and China. Russia's export potential is promising across all markets, with expectations for a further increase of 100 thousand mt in both production and exports by 2024. Notably, China's soybean oil imports from Jul-23 to Sep-23 are forecast to range between 320 and 330 thousand mt, exceeding the two-year maximum and nearly tripling the volume imported during the same period in 2022. Russia is expected to supply approximately 100 thousand mt of soybean oil to China in 2023.