1. Weekly News

United States

Soybean Oil Futures Decline Amid Increased Sowing Pace in the US

In W24, Jul-24 soybean oil futures on the ChicagoStock Exchange (CHX) fell by 1.3% for the week to USD 961 per metric ton (mt), marking a 3.3% decline for the month. Dec-24 futures also dropped by 1.6% to USD 971/mt. This decline is attributed to an increased pace of soybean sowing in the United States (US), with 87% of the planned areas sown by June 9, 2024, compared to the 5-year average of 84%. The condition of crops is rated good to excellent in 72% of the area, up from 59% last year.

US Soybean Oil Production Forecast to Reach Record High in MY 2024/25

US soybean oil production is projected to hit a new record high in the 2024/25 marketing year (MY), driven by a 4% year-on-year (YoY) increase in domestic demand. The US is expected to become a net exporter of soybean oil, with a decrease in imports and a moderate recovery in soybean oil exports from other countries. According to the US Department of Agriculture (USDA), US soybean oil ending stocks are predicted to rise by 10% YoY, while prices are expected to decline.

Egypt

Egypt Purchased 17 thousand mt of Soybean Oil in an International Auction

Egypt's General Raw Materials Supply Agency (GASC) secured 22.5 thousand mt of vegetable oils in an international auction, falling short of the planned 40 thousand mt. This included 17 thousand mt of soybean oil, compared to the planned 30 thousand mt. Mahsul Trading won a bid for 12 thousand mt, scheduled for delivery between July 20 and August 5, 2024, while Posco secured 5 thousand mt for delivery between August 15 and 30, 2024. The bid price was set at USD 1,003/mt Cost, Insurance, and Freight (CIF).

Ukarine

Record High Soybean Oil Prices in Ukraine Driven by Polish Demand

As of June 11, 2024, Ukraine's soybean oil supply prices have reached a new record high, ranging between USD 950 and USD 1,025/mt. This increase was driven by heightened demand from Poland, which has accounted for 71% of Ukraine's soybean oil exports over the past nine months. During this period, exports have risen by 21% YoY. However, a recent decline in demand has been observed, though it has yet to offset the high production costs due to the use of expensive soybeans.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

Yearly Change in Soybean Oil Pricing Important Exporters (W24 2023 to W24 2024)

Argentina

Soybean oil prices in Argentina increased 1.05% week-on-week (WoW) to USD 0.96 per kilogram (kg) in W24. The price fluctuations were supported by strong export performance in May-24. According to the Rosario Stock Exchange (BCR), Argentina exported more than 5 million metric tons (mmt) of soybeans and derivatives in May-24, the highest volume since 2020 and 60% more than the same month last year.

Brazil

Brazil's soybean oil price remained stable at USD 1/kg in W24. The Brazilian Association of Vegetable Oil Industries adjusted the 2023/24 Brazilian soybean harvest estimate to 152.5 mmt, a reduction of 1.4 mmt from earlier estimates. Soybean crushing is expected to stay at 54.5 mmt, with stable production of soybean meal and oil at 41.7 mmt and 11 mmt, respectively.

United States

In W24, soybean oil prices in the US decreased by 1.03% WoW to USD 0.96/kg. This decline was influenced by weak soybean oil future prices due to the increased sowing pace. As of June 9, 2024, 87% of planned US soybean areas were sown, which exceeds the 5-year average of 84%. Additionally, 72% of crops were rated in good to excellent condition, up from 59% last year. Furthermore, US soybean oil production is projected to reach a new record high in MY 2024/25, further decreasing prices.

Netherland

Soybean oil prices in the Netherlands increased 1.98% WoW to USD 1.03/kg in W24. Despite the price fluctuation in the Netherlands, global soybean oil prices face downward trend pressure from promising harvests in the US and Brazil. The Netherlands is one of the largest US soybean buyers, with the decreased future prices in CHX and Dalian Stock Exchange, the price will likely decline in the short term.

Spain

Soybean oil prices in Spain remained unchanged at USD 1.22/kg in W24. Sunflower oil prices rose by 2.5% to USD 943/mt in Jun-24 due to reduced supply from Ukraine and higher demand from India and the European Union (EU). In addition, the USDA's Jun-24 report slightly lowered the global vegetable oil production and consumption forecasts for 2024/25 season, leading to a forecasted decrease in global oil reserves.

3.Actionable Recommendations

Strengthen Resilience Against Climate Risks

Climate variability poses significant challenges to soybean oil production. Proactive measures, such as drought-resistant crop varieties and water management strategies, can mitigate risks associated with extreme weather events. Collaborating with agricultural research institutions to develop climate-smart farming practices enhances resilience and ensures consistent supply despite climate uncertainties.

Promote Sustainability and Traceability Initiatives

Consumer demand for sustainably sourced products is rising, necessitating industry-wide commitments to sustainability and transparency. Implementing certification programs, such as RSPO for palm oil or sustainable soy initiatives, assures consumers of ethical practices. Enhancing traceability throughout the supply chain ensures compliance with environmental regulations and meets consumer expectations for responsible sourcing.

Manage Price Volatility through Futures Markets

Given the recent price fluctuations in global soybean oil markets, stakeholders should consider leveraging futures markets for price risk management. This involves hedging strategies against adverse price movements, especially amidst fluctuating supply and demand dynamics. Collaborating with financial institutions to understand and implement practical hedging tools can mitigate financial risks associated with price volatility.

Sources: GrainTrade, Oilworld, Agravery, Sinor, and Chacra Magazine