1. Weekly News

Global

Global Soybean Oil Prices Climb as Palm Oil Shortage Drives Demand Shift

Soybean oil prices have risen globally, reaching USD 1,110 per metric ton (mt) free-on-board (FOB) in the European Union (EU), partly due to the price surge in palm oil, which now trades at a premium. Lower-than-expected production and reduced export shipments from Indonesia have constrained palm oil availability, causing price-sensitive buyers to explore alternatives, including soybean oil. This demand shift contributed to soybean oil's price increase, impacting Asia-Pacific markets and increasing pressure on the supply of other oils like sunflower oil. Analysts anticipate a potential palm oil price correction by late 2024 as Indonesian production recovers, which may influence soybean oil demand and pricing.

Soybean Oil Futures Jump 2% as Global Oil Prices Rise and Middle East Tensions Escalate

Soybean oil futures on the Chicago Board of Trade (CBOT) rose 2% week-on-week (WoW) as increased global oil prices and Middle Eastern tensions spurred gains across key agricultural commodities. Soybean futures rose, with Nov-24 contracts reaching USD 10.61 per bushel. Escalating conflicts in the Middle East, especially between Iran and Israel, have heightened concerns over oil supply, pushing Brent crude prices up by around 3%. The resulting rise in soybean oil prices reflects market fears about regional trade route stability. However, Brazil's weather conditions, affecting soybean planting, remain a focal factor for future price movement.

United States

US Soybean Oil Futures Rise as Global Supply Tightens and Chinese Demand Increases

Soybean oil futures rose on the Chicago Mercantile Exchange (CME), with the Dec-24 contract up USD 0.950 to USD 0.433 per pound (lb). This price increase is due to a tight global oil supply and higher palm oil prices, which now trade at a premium, prompting buyers to explore alternatives such as soybean oil. United States (US) soybean stocks reached a four-year high at 342 million bushels, 29% higher year-over-year (YoY), though below analyst expectations. In addition, the United States Department of Agriculture (USDA) confirmed 105.23 thousand mt of US soybean sales to China for 2024/25, supporting ongoing demand.

Minnesota Soybean Growers Association Calls for Stricter Regulations on Used Cooking Oil Imports Due to Authenticity Concerns

The Minnesota Soybean Growers Association (MSGA) advocates for more stringent regulations on used cooking oil imports, citing concerns over the authenticity and origin of these imports, particularly from China. The United Farmers Cooperative (UFC) Vice President highlighted that imported cooking oil may not be genuinely used and emphasized the need for checks to ensure quality. The association seeks to prioritize domestic feedstocks, urging for credits under provisions 40B and 45Z to favor locally sourced materials over imported soybean and palm oil. In addition, the Renewable Fuels Association (RFA) has requested an update from the Environmental Protection Agency (EPA) regarding its investigation into imported biofuel feedstocks.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

Yearly Change in Soybean Oil Pricing Important Exporters (W40 2023 to W40 2024)

Argentina

In W40, Argentina's soybean oil FOB prices increased to USD 1.00 per kilogram (kg), marking a 2.04% WoW increase and an 11.11% YoY rise. Furthermore, Argentina plans to expand soybean planting by 8%, potentially reaching a production estimate of 143.2 million tons in 2024. Export forecasts for grains, oils, and by-products could hit 101.5 million tons, generating approximately USD 35.5 billion in revenue. With the oilseed-cereal complex accounting for over half of the country's exports, supply constraints in competing countries and rising global demand could soon support upward price movements for Argentina's soybean oil.

Brazil

Brazil's soybean oil prices increased to USD 1.06/kg in W40, a 1.92% WoW increase from USD 1.04/kg in W39, aligning with international market gains. On the CME, soybean oil increased by 4.94% WoW, influenced by higher palm oil prices and adverse weather in Brazil, where high temperatures and drought have delayed planting. Soybean meal prices in Mato Grosso also saw a 0.62% WoW rise, reaching USD 349.88/mt (BRL 1,957.50/mt), following similar trends in the Chicago market, according to the Mato Grosso Institute of Agricultural Economics (IMEA).

United States

US soybean wholesale prices stood at USD 0.97/kg in W40, marking a 2.11% WoW increase but a 24.81% YoY decrease from 1.29/kg in W40 2023. Several factors drive the recent rise in US soybean oil prices. First, a tight global oil supply has increased competition for available resources, increasing prices. Higher palm oil prices have also created a premium, prompting buyers to seek alternatives like soybean oil, contributing to rising prices. Although US soybean stocks are at a four-year high of 342 million bushels, this increase has not fully met market expectations, leading to upward pressure on prices. Strong export demand, highlighted by confirmed sales of 105.23 thousand mt of US soybeans to China for the 2024/25 period, further supports price increases.

Netherlands

The Netherlands' soybean oil wholesale prices decreased to USD 1.08/kg in W40, marking a slight drop of 0.92% WoW and a 4.85% month-on-month (MoM) increase. In the Netherlands, soybean oil prices and other edible oils have significantly decreased by over 10% in the past year, with soybean oil decreasing by 2.70% YoY. This YoY decline is due to a combination of market factors, including changes in supply dynamics and broader economic trends affecting food prices. According to experts, this price reduction indicates a more stable market, suggesting consumers may experience lower costs for soybean oil and other essential food items soon, reflecting improved supply conditions and a return to normal production levels.

3. Actionable Recommendations

Diversify Sourcing Strategies

Stakeholders should implement a diversified sourcing strategy for soybean oil to mitigate risks associated with price volatility. This strategy includes establishing relationships with suppliers from multiple regions, such as the US, Brazil, and Argentina, to ensure a stable supply. Businesses can enhance their resilience against geopolitical tensions and adverse weather conditions affecting production by reducing reliance on specific suppliers and exploring alternative oil options.

Substitute Palm Oil with Soybean Oil

Given palm oil’s rising prices and constrained availability, food manufacturers and consumers should consider substituting palm oil with soybean oil. This strategic shift allows for cost mitigation while meeting market demand for healthier oil options. Companies can promote soybean oil in their product lines as a versatile and nutritious alternative, capitalizing on its increased availability due to shifting buyer preferences.

Invest in Domestic Soybean Production

Investing in local soybean production initiatives can strengthen supply chains and reduce import dependence. Stakeholders should encourage farmers to adopt modern agricultural practices and technologies that enhance yield and sustainability. Governments can facilitate this through subsidies and support programs, fostering local production growth and ensuring consistent access to soybean oil.

Sources: Tridge, Milk News, Oil World, Portal Do Agronegócio, Almalnews, RTL