1. Weekly News

Global

Global Palm Oil Shortages and Rising Demand Propel US Soybean Oil Futures Up 13% Amid Record Production

As of W44, Soybean oil futures have risen by nearly 13% since August 16, despite record-high US soybean production, largely due to global palm oil trends. Palm oil prices have risen since Apr-24, reaching two-year highs driven by reduced output expectations in Indonesia and Malaysia, the world's top producers. Concerns about lower yields due to El Niño, aging plantations, and labor shortages have tightened supply, providing a strong price floor for other edible oils, including soybean oil. Indonesia's proposed policy to raise its biodiesel blend requirement to 40% palm oil-based by 2025 could further strain global palm oil supplies, indirectly supporting US soybean oil prices.

Bangladesh

Bangladesh TCB to Procure 32.6 Million Liters of Soybean Oil and Essential Commodities Ahead of Ramadan Demand Surge

The Trading Corporation of Bangladesh (TCB) has approved the procurement of 32.6 million liters (L) of soybean oil, along with 10,000 metric tons (mt) of chickpeas and 5,000 mt of sugar, to meet increased demand ahead of Ramadan. The soybean oil will be purchased at USD 1.37/L (BDT 163.15/L), totaling USD 531.80 million (BDT 53.18 crore), under the Direct Procurement Method (DPM). This procurement is part of TCB’s initiative to ensure essential item availability during Ramadan.

Thailand

Thailand's Commerce Ministry Urges Edible Oil Processors to Maintain Prices, Citing No Production Cost Increases

The Commerce Ministry of Thailand has called on edible oil processors to avoid raising retail prices, including soybean oil, citing no increase in production costs. The ministry emphasized that price hikes, hoarding, or refusal to sell would be considered offenses under the Price of Goods and Services Act. The Soybean and Rice Bran Oil Processor Association (NOPA) has been formally requested to prevent price increases, and consumers have been encouraged to report any unfair pricing. The department also works with wholesale and retail outlets to offer discounts and promotional activities to reduce consumer costs. Violators face penalties of up to seven years in prison or fines of up to USD 4122.52 (THB 140,000).

United States

US Soybean Crush Rebounds in Sep-24, Setting Record Highs Driven by Increased Demand for Soybean Oil

The United States (US) soybean crush is forecasted to have rebounded in Sep-24, with analysts predicting a total of 5.623 million metric tons (mmt) (187.4 million bushels), marking an 11.9% increase from the previous month's near three-year low. This would also represent a 7.2% rise from the same period in 2023, setting a new record for September. The surge in crush is due to increased processing capacity and rising demand for soybean oil, especially for biofuel production. As of September 30, 2024, US soybean oil stocks are estimated at 1.539 billion pounds (lbs), reflecting a slight decrease from Aug-24 and the previous year.

2. Weekly Pricing

Weekly Soybean Oil Pricing Important Exporters (USD/kg)

Yearly Change in Soybean Oil Pricing Important Exporters (W44 2023 to W44 2024)

Argentina

Argentina's soybean oil prices experienced a slight decrease in W44, falling to USD 1.10 per kilogram (kg), marking a 0.90% week-on-week (WoW) drop but reflecting a 20.88% year-on-year (YoY) increase. This price movement comes as the Argentine Soybean Chain Association (ACSOJA) unveiled a new "First map of the intrinsic quality of Argentine soybeans," which offers insights into the variability of soybean protein and oil content across regions. The study indicates that regions like the Core Zone and Santa Fe Center show higher oil content, while protein levels have declined nationally. This regional variation has direct economic implications, potentially influencing the quality of soybean derivatives like oil and flour and affecting export revenues.

Brazil

Brazil's soybean oil prices rose to USD 1.12/kg in W44, marking a 2.75% WoW increase and reflecting an 8.74% YoY rise. This price movement coincides with expectations of a record soybean harvest in the 2024/25 season, projected at 161 mmt, a 6% increase from the previous year. This growth is driven by technological advancements and favorable market conditions, including a strong exchange rate and rising global demand. Despite low prices, Brazilian farmers continue to expand soybean production, with increased exports, particularly to China, and an estimated 55.5 mmt of soybean crush for 2024/25, a 2.5% increase from the previous year, forecasted to bolster domestic and export demand for soybean oil, supporting further price stability.

United States

In the US, soybean oil prices slightly increased to USD 0.97/kg in W44, representing a 1.04% WoW rise but a significant 13.39% YoY decline. This recent price uptick was primarily fueled by growing biodiesel demand, despite downward pressure from the US soybean harvest. Additionally, strong export sales of 2.3 mmt of soybeans—matching market expectations—supported the price rally. The steady demand from the biodiesel sector indicates sustained support for soybean oil prices in the near term, even as seasonal harvest pressure and a broader annual price decline persist.

Netherlands

In W44, soybean oil prices in the Netherlands decreased to USD 1.12/kg, a 1.75% WoW drop, though up 3.70% MoM. This decline occurred amid overall weakness in the Dutch edible oil market, where improved supply conditions and favorable economic factors stabilized prices, creating a more resilient market environment for soybean oil.

Spain

In W44, soybean oil prices in Spain rose to USD 1.41/kg, marking an 8.46% WoW increase and a 10.16% YoY increase. This price uptick reflects broader market dynamics and the increasing demand for soybean-based products. In the context of soybean cultivation in Spain, particularly in Castilla y León, there has been debate over its potential as an alternative crop for irrigated land. Critics argue that soybeans face significant challenges in Spain, including low yields, agronomic issues, and competition from global prices, particularly from major producers like the US, Argentina, and Brazil. Some farmers continue to grow soybeans, primarily driven by the need for a local, traceable source of non-GMO soy for their products. Despite this, the broader adoption of soybean farming in Spain remains uncertain, as the agronomic and economic viability in the region remains limited.

3. Actionable Recommendations

Leverage Palm Oil Price Trends to Optimize Soybean Oil Procurement

Given the rise in global palm oil prices due to reduced output in Indonesia and Malaysia, stakeholders in the soybean oil market should consider strategic procurement planning. To capitalize on this trend, companies can secure soybean oil at current price levels or explore long-term contracts with suppliers to lock in favorable rates. This approach will help mitigate the impact of rising edible oil prices caused by palm oil supply constraints and position businesses to benefit from the strong price floor created by the palm oil market.

Diversify Market Exposure in Emerging Regions

As soybean oil demand increases in emerging markets like Bangladesh and Thailand, stakeholders should explore new market opportunities in these regions. Expanding sales in high-growth areas ahead of events like Ramadan in Bangladesh or addressing price stability concerns in Thailand can help diversify revenue streams and reduce reliance on mature markets. Developing strong local partnerships and aligning with government procurement initiatives will further secure market share and ensure stable demand.

Sources: Tridge, Terre Net, Food Business News, Business Post DB, Thaiger, Reuters, TN, El Español