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Trade4go
Mar 28th, 2025
Original content
A recent analysis of the soybean oil market from Universidad Austral highlights the impact of low stocks and strong global demand. Despite high United States (US) soybean inventories and slow Chinese purchases, soybean oil prices remain firm due to the limited availability of alternative oils like palm and rapeseed oils. The US biofuel policy further supports soybean oil demand, as minimal US stocks continue to drive market strength. In Argentina, soybean oil export payments are influenced by global demand, with prices ranging between USD 270 and USD 317 per ton. Additionally, reduced soybean acreage in the US is expected to push prices higher, while corn prices may decline with favorable planting conditions in Brazil and the US.
Ukraine’s soybean oil exports surged 52% year-on-year (YoY) in the first half of the 2024/25 season, reaching a record 245,400 metric tons (mt), driven by increased shipments to Poland and a resurgence in Indian demand. Feb-25 exports rose 38% from Jan-25, with Indian purchases reaching their highest level since Mar-20. Ukrainian soybean oil prices reached USD 920 to 950/mt free carrier (FCA), supported by stronger European Union (EU) demand amid euro appreciation. However, global soybean oil prices face downward pressure due to expectations of record soybean harvests in Brazil with 170 million metric tons (mmt), and Argentina with 49 mmt, along with US trade tensions with key partners, including China.
In W12, Argentina's soybean oil prices remained stable at USD 0.99 per kilogram (kg), with no weekly changes but experienced an 8.79% increase YoY. However, a nationwide strike by oil workers has disrupted soybean processing operations, particularly in the Rosario agro-industrial belt, a key production hub. This strike has led to delays in production and exports, tightening supply and potentially exerting upward pressure on prices in the short term. If the disruptions continue, they could exacerbate market volatility, limiting Argentina's soybean oil availability on the global market and contributing to higher prices.
Brazil's soybean oil prices decreased to USD 1.15/kg in W12, reflecting a slight drop of 0.86% week-on-week (WoW) but an 18.56% increase YoY. Despite a slight reduction in the 2025 soybean harvest forecast, a decrease of 0.5%, Brazil's soybean production is still expected to reach a record 170.9 million tons, driven by a yield recovery. The Brazilian Association of Vegetable Oil Industries (Abiove) raised its soybean oil export forecast by 27.3%, citing the government's decision to maintain the biodiesel blend at 14%. This move, along with stable export and processing projections, will likely support demand for soybean oil. While lower soybean prices could lead to more competitive export opportunities, the shift in biodiesel policy ensures ongoing support for soybean oil prices, maintaining a robust market outlook for the near term.
In W12, US soybean oil prices rose to USD 0.93/kg, up 2.20% WoW but down 13.08% YoY. The price increase coincided with a 63% weekly surge in exports, driven by strong demand from India and South Korea. However, net sales for the 2024/25 season fell 50% from the previous week, indicating potentially weaker future demand. If export momentum continues, prices may find short-term support. However, declining net sales and increasing global supplies, particularly from South America, could exert downward pressure on US soybean oil prices in the coming months.
In W12, soybean oil prices in the Netherlands rose to USD 1.18/kg, reflecting a 2.61% increase both WoW and month-on-month (MoM) and a 22.92% rise YoY. As a major European trade hub, the Netherlands imports over 99% of its soybean supply, with the Port of Rotterdam playing a crucial role in re-exporting to other European markets. Growing demand within the EU, combined with a strengthening euro, is likely to continue exerting upward pressure on prices. However, potential disruptions in supply chains or changes in European renewable energy policies could introduce additional volatility, leading to fluctuations in soybean oil prices in the near future.
The ongoing strike in Argentina’s oil industry, particularly in the Rosario agro-industrial belt, is tightening the soybean oil supply, which could lead to short-term price increases. Importers and processors should consider securing contracts with alternative suppliers from Brazil, Ukraine, and the US to hedge against potential disruptions. In the long term, investing in strategic stockpiling or diversifying sourcing strategies could help manage future supply chain volatility and price fluctuations.
Given the increased demand for soybean oil in both the EU and India, with EU prices rising by 22.92% YoY, businesses should prioritize securing long-term export agreements with key partners in these regions. With the European market facing tight supply chains and the strengthening euro further boosting prices, exporters should explore additional trade opportunities, especially considering Indian demand has hit a high point not seen in four years. This could be a profitable time to expand in these markets.
Sources: Tridge, Sinor, Fast Markets, Mass Negocios, Agro Negocios
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