W21 2024: Soybean Oil Weekly Update

Published 2024년 5월 31일

In W21 in the soybean oil landscape, despite favorable weather conditions and good progress in the US planting season, soybean oil futures on the CHX rose by 0.3% due to solid derivatives prices and support from neighboring markets. In Q1-2024, Russia significantly increased its edible vegetable oil exports, solidifying its position as a major supplier in the market. Moreover, in W21, soybean oil prices in Argentina, Brazil, the US, the Netherlands and Spain increased WoW by 5.68%, 3.13%, 3.09%, 3.06% and 0.82% respectively.

1.Weekly News

United States

Soybean Oil Futures on CHX in W21

On May 23, 2024, Jul-24 soybean oil futures on the Chicago Stock Exchange (CHX) fell by 1.4% to USD 996 per metric ton (mt), but saw a 1.6% increase for the week. This drop was based on data from the National Association of Oilseed Processors (NOPA), which reported a 60% year-on-year (YoY) increase in oil stocks in the United States (US) from Oct-23 to Apr-24 due to rising processing volumes.

On May 24, 2024, Jul-24 soybean oil futures on the CHX rose by 0.3%. Strong derivatives prices and neighboring markets supported this increase despite the good progress of the 2024/25 planting season in the US, which pressured prices. The weather conditions in the American Midwest will be favorable in the coming days, contributing to the ongoing planting progress.

Russia

Russia's Strong Performance in Vegetable Oil Exports in Q1-2024

In Q1-2024, Russia achieved a new record by exporting 578.3 thousand mt of edible vegetable oils, including sunflower, rapeseed, and soybean to China, marking an 18.2% YoY increase. This strengthened Russia's position as a leading supplier in the market, with its share accounting for 58.4% of China's total edible vegetable oils imports. Besides China, Russia also increased its vegetable oil exports to India, Turkey, Egypt, and Algeria, leading to a 20% YoY increase in total vegetable oil shipments in this period.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

* All pricing is wholesale, other than Argentina's free-on-board (FOB)

Yearly Change in Soybean Oil Pricing Important Exporters (W21 2023 to W21 2024)

Argentina

Soybean oil prices in Argentina increased 5.68% week-on-week (WoW) to USD 0.93 per kilogram (kg) in W21. The fluctuation can be attributed to increased future prices due to the delayed soybean harvest in Argentina due to adverse weather conditions.

Brazil

Brazil's soybean oil prices increased by 3.13% WoW to USD0.99/kg in W21, compared to USD 0.96/kg in W20. The price increase is supported by improving export demand and concerns over soybean crop losses from floods in the southern state of Rio Grande do Sul.

United States

In W21, soybean oil prices in the US increased by 3.09% WoW to USD 1/kg. This price surge is attributed to robust future prices, supported by solid derivatives prices and strong exports in the neighboring markets such as Argentina, despite the favorable progress of the US's 2024/25 planting season.

Netherlands

Soybean oil prices in the Netherlands increased by 0.82% WoW to USD 1.01/kg. Strong futures and political uncertainties between China and the US have driven the price fluctuations. In addition, the increased soybean meal prices also contributed to the price increase.

Spain

Soybean oil prices in Spain increased slightly by 3.06% WoW to USD 1.23/kg in W21 compared to USD 1.22/kg in W20. The price increase can be attributed to strong domestic demand and currency fluctuations.

3. Actionable Recommendations

Assess Planting Progress

With the planting season underway in the US, it is essential to keep a close eye on weather conditions and planting progress. Favorable weather forecasts for the American Midwest indicate optimal conditions, potentially leading to increased supply. Traders should assess planting progress reports and weather updates to gauge the potential impact on future soybean oil prices.

Analyze Demand Trends

Understanding demand dynamics, especially from major importing countries like China, India, and Turkey, is crucial for predicting future price movements. Russia's strong performance in vegetable oil exports to these markets highlights the importance of demand trends in shaping prices. Traders should analyze demand forecasts, consumption patterns, and geopolitical factors influencing trade relations to anticipate changes in demand and adjust trading strategies accordingly.

Monitor Stock Levels

Given the significant increase in soybean oil stocks reported by NOPA, traders and investors must monitor inventory levels closely. Fluctuations in stock levels can directly impact futures prices, so staying informed about inventory data releases and analyzing trends can help anticipate market movements and make informed trading decisions.