Weekly Product Updates

W20 2024: Soybean Oil Weekly Update

Published May 24, 2024
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In W20 in the soybean oil landscape, the US' soybean crushing fell below market expectations to 4.52 mmt on Apr-24. The USDA predicts global soybean production will reach 65.5 mmt in the 2024/25 season. In addition, Brazil's soybean oil exports are expected to drop to 1.70 mmt in MY 2023/24 due to an increased biodiesel mandate, which has redirected a significant portion of edible oil production toward the domestic market. Furthermore, Paraguay's soybean oil exports totaled 190.01 thousand mt, marking a 50% YoY increase. Lastly, soybean oil prices in Argentina, the US, and the Netherlands increased by 3.53%, 2.11%, and 2.08% WoW in W20, while the prices in Brazil remained unchanged.

1.Weekly News

United States

US Soybean Crushing Dropped Below Market Expectations in Apr-24

Soybean crushing in the United States (US) totaled 4.52 million metric tons (mmt) in Apr-24, lower than the market's expectations of 4.98 mmt. Based on monthly and yearly comparisons, the volume decreased by 18.36% and 4.2%, respectively. Additionally, soybean oil inventories were reported at 1.76 billion pounds (lbs) in Apr-24, down 5.2% from Mar-24 and below market expectations of 1.88 billion lbs.

USDA Forecasts Soybean Oil Production to Reach 65.5 mmt in MY 2024/25

According to the latest United States Department of Agriculture (USDA) forecast, global vegetable oil production is projected to increase to 228.28 mmt in marketing year (MY) 2024/25. This represents a steady upward trend from 223.8 mmt in MY 2023/24, 218.33 mmt in MY 2022/23, and 208.55 mmt in MY 2021/22. Specifically, soybean oil production is anticipated to reach 65.4 mmt in MY 2024/25, compared to 62.4 mmt in MY 2023/24, 58.6 mmt in MY 2022/23, and 60 mmt in MY 2021/22.

The USDA also advised that global consumption of vegetable oils in MY 2024/25 will increase to 224.9 mmt compared to 218.8 mmt in MY 2023/24. Soybean oil consumption is expected to reach 64.5 mmt, compared to 61.4 mmt in MY 2023/24.

Brazil

Brazil's Soybean Oil Exports Projected to Decline in MY 2023/24

S&P Global Commodity Insights projects that Brazil's soybean oil exports will drop to 1.70 mmt in MY 2023/24, compared to 2.30 million mt in MY 2022/23. This decline is due to an increased biodiesel mandate, which has redirected a significant portion of edible oil production towards the domestic market.

Paraguay

Paraguay's Soybean Oil Exports Volume Surged by 50% YoY in Apr-24

Paraguay's soybean oil exports surged, with shipments totaling 190.01 thousand metric tons (mt) in Apr-24, marking a substantial 50% year-on-year (YoY) increase. This export volume surge contributed to a notable increase in foreign exchange earnings, reaching USD 149.9 million, an 8.4% YoY increase. Despite the higher volume, the average export price decreased by 28% YoY to USD 789/mt.

2.Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

* All pricing is wholesale, other than Argentina's FOB

Yearly Change in Soybean Oil Pricing Important Exporters (W20 2023 to W20 2024)

* All pricing is wholesale, other than Argentina's FOB
* Blank spaces in the graph signify data unavailability stemming from factors like supply unavailability, missing data, or seasonality

Argentina

Soybean oil prices in Argentina experienced a 3.53% week-on-week (WoW) increase to USD 0.88 per kilogram (kg) in W20. The fluctuation can be attributed to increased future prices since traders speculate that soybean oil may be subjected to tariffs by the US.

Brazil

Brazil's soybean oil prices remained at USD0.96/kg in W20. Recent demand from China and concerns over crop losses from floods in the southern state of Rio Grande do Sul are expected to support price increases.

United States

In W20, soybean oil prices in the US increased by 2.11% WoW to USD 0.97/kg. The price increase is driven by the news that soybean oil may be included on the list of tariffs expected to be announced by the US.

Netherlands

Soybean oil prices in the Netherlands increased by 2.08% WoW to USD 0.98/kg. Robust futures and political uncertainties between China and the US have driven recent price fluctuations. Furthermore, the USDA's increased 2024/25 consumption forecast for soybean oil has also contributed to the price increase.

Spain

Soybean oil prices in Spain increased by 3.39% WoW to USD 1.22/kg in W20 compared to USD 1.17/kg in W19. The fluctuation can be attributed to increased future prices in the US, slow harvest progress, and quality concerns in Brazil.

3. Actionable Recommendations

Supply Chain Optimization and Efficiency

Given the fluctuations in soybean oil prices and the potential impact of geopolitical tensions on trade dynamics, optimizing supply chain operations is critical for maintaining competitiveness and profitability. Investing in advanced logistics technologies, such as blockchain-based traceability systems and predictive analytics, can enhance the supply chain's transparency, efficiency, and resilience, thereby mitigating risks and reducing operational costs.

Adoption of Digital Marketing and E-commerce

Leveraging online channels and e-commerce platforms can expand market reach and enhance customer engagement for soybean oil producers. Investing in digital marketing strategies like social media marketing, content creation, and search engine optimization (SEO) can help raise brand awareness and drive online sales. Moreover, establishing direct-to-consumer (D2C) e-commerce channels enables companies to bypass traditional distribution channels, capture valuable consumer data, and tailor marketing efforts to specific target audiences.

Investment in Value-Added Products

Prioritize investment in value-added products and derivatives. This includes developing specialty oils tailored to specific culinary or industrial applications, such as high-oleic soybean oil for frying purposes or bio-based lubricants for industrial use. By offering differentiated products with unique value propositions, companies can command premium prices and capture higher margins in the market.

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