W38: Soybean Oil Update

In W38 in the soybean oil landscape, on September 18, soybean oil futures for Sept-23 delivery on the Chicago Commodity Exchange (CBOT) dropped 3.85% to USD 0.6094 per pound (lb) driven by the commencement of the harvest season in the United States (US), which exerted pressure on oilseed prices. The market also faced reduced buying activity due to abundant supplies from Brazil and Argentina, leaving major buyers like China less eager for new purchases. Another contributing factor was the start of planting for the upcoming soybean harvest in Brazil, which, according to the United States Department of Agriculture (USDA), is expected to be even larger than in previous years. On September 19, the Oct-23 soybean oil contract further dropped 1.01% to USD 0.6176 per lb. There were minor losses for the 23/24 harvest and slight gains for the 24/25 harvest. The soybean market remained under pressure due to the beginning of the US harvest season and strong demand for Brazilian grain. Notably, Brazil had already exported more soybeans until Sept-23 than in the entire 2022. On September 20, soybean oil futures declined further by 1.75% to USD 0.6068/lb and by 1.70% to USD 0.5965/lb on September 21, driven by weak demand for North American grain.

The Ukrainian soybean oil market for the 2023/24 season has shifted from its previous upward price trend to a downward one due to the arrival of high-quality new soybean crop since early Sept-23, resulting in limited soybean oil supply. However, customer demand for these products has been restrained, with purchases mainly in small quantities as buyers anticipate a seasonal price drop. Consequently, processors have reduced selling prices for soybean oil in response to the current situation and the increased supply of soybeans from the new crop. Since the beginning of Sept-23, supply prices for soybean oil in Ukraine have decreased by USD 29.76 to USD 75.76 per metric ton (mt), with prices currently ranging from USD 844.17 to USD 898.28/mt EXW. Meanwhile, in Sept-22, the supply prices for these products were primarily in the range of USD 1122.85 to USD 1204.02/mt EXW.

In the 2022/23 season, Ukraine witnessed an 18% increase in soybean oil production and exports. Similarly, during the 2022/23 season (September to August), Russia saw an 18% growth in soybean oil exports, reaching 662 thousand mt. Looking ahead to 2023, the USDA predicts that Russia will have a soybean harvest of 6 million metric tons (mmt) and the potential to export 710 thousand mt of soybean oil. Additionally, the Russian Animal and Plant Inspection and Quarantine Service reported that Kaliningrad Oblast has exported approximately 482 thousand mt of various oils, including soybean oil, rapeseed oil, sunflower oil, and linseed oil, to China since the beginning of the year.

Lastly, in Aug-23, India's import of soybean oil increased by 4.56% month-on-month (MoM), rising from 342.27 thousand mt to 357.89 thousand mt. This import figure also marked a notable increase compared to 244.697 thousand mt in Jul-22. India's demand for vegetable oils is rising due to falling prices and concerns about a potential crop failure.