W37: Soybean Oil Update

In W37 in the soybean oil landscape, on Monday, September 11, soybean oil futures for Sept-23 delivery dropped by 0.20% to USD 0.6134 per pound (lb) on the Chicago Commodity Exchange (CBOT) due to an increase in palm oil stocks in Malaysia, which generally put pressure on the vegetable oil markets. On September 12, soybean oil closed down by 0.54% to USD 0.6101/lb after the United States Department of Agriculture (USDA) released lower-than-expected figures for North American harvest and yield, with higher ending stocks than analysts' projections. Brazil's robust export supply also weighed on prices. However, on September 13, soybean oil futures rebounded significantly, closing up 3% to USD 0.6284/lb, driven by a lower production estimate in the United States (US). The hot and dry weather in the North American Midwest further supported prices on Thursday, September 14, with futures rising by 0.10% to USD 0.6290/lb.

The US soybean supply for the 2023/24 season is expected to decrease for the third consecutive year, resulting in low export levels due to rising domestic demand. The demand for soybean oil, especially for local processing and biofuel production, has surged, causing soybean oil exports to decline significantly. This shift is gradually reducing the availability of soybean oil for human consumption. Soybean oil exports are projected to decrease by nearly 80% in the 2022/23 season, reaching only 0.18 million metric tons (mmt), and this low export level is expected to persist in 2023/24. This trend signifies that the US is moving away from the soybean oil export market, with Brazil emerging as a prominent player in this space.

Ukraine’s soybean oil exports increased 18% during the 2022/23 season compared to the previous season. Lastly, in Paraguay, exports of the soybean complex, which includes soybeans, soybean oil, and pellets, brought in USD 3.46 billion by the end of Q2-23. Soybean oil exports reached 335,637 metric tons (mt) until Aug-23, marking a 4% increase (13,058 mt more) compared to the same period in 2022. However, despite increased export volume, there was a decline in income, with revenues dropping from USD 468 million to USD 343 million.