In W40 in the soybean oil landscape, on Tuesday, October 3, soybean oil futures for Oct-23 delivery on the Chicago Commodity Exchange (CBOT) closed down 0.67% to USD 0.5945 per pound (lb). This decline was due to the advanced harvest in the United States (US), which reached 23% of the planted area, exceeding the previous year and historical averages. Moreover, the crop's productivity, particularly in the eastern part of the soybean/corn belt, exceeded expectations, and crop quality improved by 2% week-on-week (WoW), according to the United States Department of Agriculture (USDA). Subsequently, on Wednesday, October 4, soybean oil prices declined further by 1.72%, closing at USD 0.5843/lb, influenced by improved Chinese demand and the progress of the US harvest.
On Friday, October 6, Dec-23 soybean oil futures on the Chicago Stock Exchange fell by 3.8% to USD 1,218 per metric ton (mt) since Monday, reflecting a 13% month-on-month (MoM) decline and a 5.4% year-on-year (YoY) decrease. Several factors contributed to this decline, including a rapid soybean harvesting pace, increased offers from the new crop, and improved crop forecasts driven by favorable weather conditions in Sept-23. In 2023, the US is expected to harvest approximately 112.8 million metric tons (mmt) of soybeans, down from 116.4 mmt in 2022, with exports estimated to reach 48.7 mmt, compared to 54.2 mmt in the 2022/23 marketing year (MY). These factors would boost supply in the domestic market, which experienced a shortage at the end of the prior season due to robust exports, leading to an increase in soybean oil prices to USD 1,500/mt in Aug-23. In contrast, prices of other oils remained stable or decreased.
In Aug-23, the US soybean crush volume is anticipated to have dropped to its lowest point in 11 months, with an estimated 4.67 mmt. Additionally, soybean oil inventories are projected to have decreased to 1.840 billion lbs by August 31. Meanwhile, among the National Oilseed Processors Association (NOPA) members, soybean oil inventories dropped to 1.250 billion lbs as of August 30, marking the lowest month-end oil inventories since October 2017.
Bursa Malaysia Derivatives (BMD), renowned for offering highly liquid crude palm oil futures, is planning to introduce soybean oil futures in Q1-24, which will provide a hedging tool for traders and refiners that deal with various edible oils. BMD's initial focus is on soybean oil, with plans to expand to other edible oils like sunflower oil. The suspension of palm and soybean oil futures trading in India has encouraged Indian traders to hedge their missile defense exposure. India, the world's largest importer of edible oils, discontinued trading in derivatives contracts for major agricultural commodities in Dec-21.
Lastly, Indian edible oil imports fell 19% MoM in Sept-23 to 1.5 mmt. However, soybean oil imports saw a 2% MoM increase, reaching 365 thousand mt. Meanwhile, in Aug-23, soybean oil imports increased by 3.7% MoM, totaling 355 thousand mt. This import boost in August was facilitated by the government's decision to offer a 12% discount on import duties for sunflower and soybean oil.