1. Weekly News

Global

Global Vegetable Oil Production and Consumption Projections for MY 2024/25

The Union for the Promotion of Oil and Protein Plants (UFOP) projects that global vegetable oil production will reach 224.2 million metric tons (mmt) in the 2024/25 marketing year (MY), an increase of 2.7 mmt compared to the 2023/24 season. Oil consumption is estimated at 221.7 mmt, reflecting a 5.3 mmt increase from the previous season. The estimated ending stock is 29.6 mmt, falling below the long-term average. Specifically, soybean oil production is expected to increase by 3.2 mmt, setting a new record of 65.5 mmt this season.

Canada and United States

Canada Redirects Canola Oil to the US Amid China’s Anti-Dumping Investigations

In response to China’s anti-dumping investigations into Canadian canola imports, Canada plans to redirect most of its canola oil exports to the United States (US) instead of China. This trade flow shift has already impacted the US soybean oil market, putting downward pressure on prices. As China looks for alternative oilseed products to replace Canadian imports, this change could boost US soybean exports due to demand from Chinese oil factories. Additionally, China is also expected to increase its canola imports from Australia.

India

India Considers Raising Vegetable Oil Import Tax

Due to low oilseed prices, India is considering raising vegetable oil import taxes to support local farmers. Expected to be announced in the coming weeks, the potential move may reduce overseas purchases of palm, soy, and sunflower oils. According to unnamed government officials, a proposal from the Ministry of Agriculture and Farmers Welfare (MAFW) is under consideration, and the final decision will be made by the Department of Revenue (DOR), which falls under India's Ministry of Finance.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

Yearly Change in Soybean Oil Pricing Important Exporters (W35 2023 to W35 2024)

Argentina

In W35, Argentina's soybean oil price rose to USD 0.94 per kilogram (kg), marking a 2.17% week-on-week (WoW) and a 4.44% month-on-month (MoM) rise. However, the year-on-year (YoY) prices remained unchanged. Due to strong demand from China, the country's soybean oil prices continued to increase this week. However, Argentina's high soybean production during the 2023/24 season is expected to exert downward pressure on soybean oil prices in the coming months.

Brazil

Brazil’s soybean oil prices declined by 1.0% WoW to USD 0.99/kg in W35, compared to USD 1/kg in W34 due to currency fluctuation. The MoM increased by 1.02% from USD 0.98% in W32, while the YoY prices dropped 1% YoY from USD 1/kg in W35 2023. Brazil’s soybean oil exports are expected to decline in the coming years due to rising domestic demand for biodiesel. In particular, in the 2024/25 season, Brazil’s soybean oil exports fell by 22% YoY. This trend will likely continue affecting the export market, especially for India. During the 2023/24 season, 21.2% of India’s soybean oil imports came from Brazil. As Brazilian exports decline, India may need to look for alternative trading partners.

Unites States

US soybean oil prices increased by 3.33% WoW to USD 0.94/kg in W35, reflecting an increase of 1.09% MoM and a drop of 36.3% YoY. Soybean oil futures prices increased this week due to rising rival oil prices and strong demand from China. While there were concerns that recent hot and dry weather in the Midwest could negatively affect the soybean crop, milder weather forecasts have eased these worries among market participants.

Netherlands

In W35, soybean oil prices in the Netherlands increased by 1.94% WoW and 2.94% MoM, reaching USD 1.05/kg. However, prices declined by 7.89% YoY. The price increase can be attributed to high vegetable oil prices, resulting from limited palm and sunflower oil production due to climate change. In addition, the firm buying from China also supports the prices in the Netherlands.

Spain

Spain’s soybean oil prices increased by 1.65% WoW to USD 1.24/kg, following the global trend supported by China’s higher-than-expected imports. Spain’s soybean oil consumption has increased in 2024 due to rising palm oil prices, which has shifted the demand to more affordable oils such as soybean oil and sunflower oil. However, as palm production is set to recover in Spain, the market will likely recover, influencing Spain’s soybean oil consumption.

3.Actionable Recommendations

Strengthening Soybean Oil Competitiveness

As Canada redirects its canola oil to the US, soybean oil producers will face increased competition. To maintain market share, US producers should focus on diversifying export markets, particularly targeting regions with growing oilseed demand, such as Southeast Asia and India. Additionally, investment in biofuel programs can help create more domestic demand for soybean oil, further stabilizing prices. Strengthening diplomatic ties with China to increase US soybean exports could also alleviate any potential market disruptions from the influx of Canadian canola oil.

Balancing Import Tax Increases with Consumer Prices

India is considering raising vegetable oil import taxes to support local farmers amid falling oilseed prices. To achieve a balance between protecting farmers and avoiding excessive inflation for consumers, India should implement gradual tariff increases. Simultaneously, offering price support and subsidies to domestic oilseed farmers can encourage local production, reducing reliance on imports. Investing in crop technology to improve oilseed yields will also strengthen domestic agriculture and help maintain long-term price stability for consumers.

Sources: Tridge, AgroPortal.ua, BrownField, Theedgemarkets, energynews