W45: Soybean Oil Update

In W45 in the soybean oil landscape, on Monday, November 6, futures for Dec-23 delivery closed lower by 1.91% to USD 0.4936 per pound (lb). However, on Tuesday, November 7, prices were up by 2.92% to USD 0.5080/lb due to increased demand for North American soybeans. The United States Department of Agriculture (USDA) reported weekly soybean shipments exceeding 2 million metric tons (mmt) and an additional sale of 126 thousand metric tons (mt) for the 23/24 harvest to China. Planting in Brazil is another factor that supports the increase in Chicago. On Wednesday, November 8, prices dropped by 2.58% to USD 0.4949/lb, influenced by profit-taking movements. Soybean oil futures rebounded on Thursday, November 9, closing up 0.93% at USD 0.4995/lb and reaching USD 0.5045/lb on November 10. The USDA reported exports of 909.5 thousand mt of US soybeans, with notable quantities going to China and undisclosed destinations, totaling 236 thousand mt in the first two days of the week.

Brazil's soybean complex (grain, bran, and oil) export volume for 2023 is projected to reach a record 125.40 mmt, reflecting a significant increase of 23.3% year-on-year (YoY) compared to the 2022 figure of 101.68 mmt. This projection includes estimated shipments of 101 mmt of soybeans (+28.3% YoY), 22 mmt of soybean meal (+8.1% YoY), and 2.4 mmt of soybean oil (-7.6% YoY). Despite a decline in average prices, Brazil expects a record-breaking foreign exchange revenue of USD 66.4 billion, surpassing the 2022 record of USD 60.7 billion by 9.4%. The breakdown includes USD 52.5 billion from soybean sales (+13.0% YoY), USD 11.3 billion from bran sales (+9.7% YoY), and USD 2.6 billion from oil sales (-34.1% YoY).

Brazil and India have signed an agreement aimed at facilitating the supply of soybean products to India. The memorandum, ratified by the Brazilian Association of Vegetable Oil Industries (Abiove) and the Solvent Extractor's Association of India (SEA), was signed during an international seminar on sector perspectives held in New Delhi. Brazil is a major supplier, responsible for almost 40% of the soybean oil imported by India. India is the largest importer of edible oils globally, with around 15 to 16 mmt per year, and soybean oil accounts for approximately 4 mmt of this total, with the majority sourced from Latin America. In the first nine months of 2023, Brazil was the origin of 39.5% of the soybean oil purchased by India. Argentina remains the main exporter to India, supplying around 50% of the imported volume.

Lastly, in the 2022/23 marketing year ending on October 31, India's imports of edible oil surged by 17% YoY, reaching a record 16.5 mmt. However, soybean oil imports declined by 12% YoY, totaling 3.67 mmt.

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