W27: Soybean Oil Update

In W27 in the soybean oil landscape, on Friday, June 30, on the Chicago stock exchange, the July futures price witnessed a significant increase of 10%, reaching USD 1,400/mt, representing a 9.7% WoW increase and 29% MoM increase. The rise in soybean oil quotes was particularly strong due to a 17% YoY decrease in United States (US) soybean inventories as of June 1. Processors have started importing soybeans from Brazil to maintain production capacity and reduce costs. However, on July 6, the August futures for soybean oil on the Chicago stock exchange experienced a 3.1% decline to USD 1,387/mt. Despite this drop, there was still a significant increase of 9.2% WoW and 26% MoM. Traders took profits after the sharp price surge observed in the previous week.

Soybean oil port differentials in South American markets have plunged to historic lows amid quiet demand from destinations and soaring Chicago Board of Trade futures. Pressure has been following cheaper rival vegetable oils for key buyers, India and China, the world’s largest vegetable oil importers. According to experts, the lack of demand is due to soybean oil being relatively expensive compared to sunflower oil from the Black Sea region. Prices of sunflower oil FOB Black Sea have been approximately USD 200/mt lower than South American soybean oil supplies, while crude palm oil FOB Indonesia is USD 50/mt lower than FOB Paranaguá.

In the US, export sales for several major commodities improved during the week ending June 29. However, soybean oil experienced a net reduction of 6,300 mt, as sales of 300 to 1,500 mt were outweighed by a cancellation of 9 thousand mt from Mexico. Cumulative soybean oil exports in 2023 amounted to 123,200 mt, a decrease compared to 685,600 mt in 2022. Lastly, India increased soybean oil imports by 35% MoM to 432 thousand mt in June.