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Trade4go
Apr 4th, 2025
Original content
Soybean oil prices in Bangladesh are set to rise by USD 0.15 per liter (BDT 18/L) starting April 1, following the expiration of a value-added tax (VAT) exemption on March 31. The exemption, first introduced in Mar-22 to stabilize prices amid global supply disruptions, was extended multiple times before being lifted. The Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association (BVOVMA) notified authorities just before the Eid holiday, giving regulators little time to respond. While refiners cite increased import costs, critics argue the hike exceeds the actual tax impact, raising concerns over profit-driven pricing. Past government extensions of VAT relief failed to lower prices, and officials assert that price increases require approval, which has not been granted. Consumers now face higher costs, with household budgets further strained amid post-holiday spending.
Brazil's Association of Vegetable Oil Industries (Abiove) raised the country's 2024/25 soybean oil export estimate by 27.3% to 1.4 million metric tons (mmt) following the government’s decision to keep the biodiesel blend at B14 instead of increasing to B15. This policy shift, aimed at controlling food prices, reduced expected domestic soybean oil consumption by 3.8% to 10.1 mmt. Expecting a gradual increase to B20, biodiesel producers who invested in new capacities continue to advocate for policy adjustments. Future soybean oil demand will depend on government mandates and global market trends.
Argentina’s soybean oil prices rose to USD 1.01 per kilogram (kg) in W13, up 2.02% week-on-week (WoW) and 10.99% year-on-year (YoY), driven by reduced soybean sales amid exchange rate uncertainty and tax concerns. Farmers are withholding sales, awaiting potential tax relief and exchange rate adjustments, limiting supply. This decline in sales—at a 10-year low—tightens availability, supporting higher soybean oil prices in the short term. If the government maintains high export taxes or delays reforms, constrained supply could sustain elevated prices. Conversely, any tax reductions or currency stabilization may lead to increased sales, potentially easing future price pressures. Global buyers should monitor Argentina’s policy shifts, as continued uncertainty may impact export volumes and pricing dynamics.
Brazil’s soybean oil prices rose to USD 1.18/kg in W13, reflecting a 2.61% WoW increase and a 13.46% YoY surge. Despite a slight 0.5% reduction in the 2025 soybean harvest forecast, production is still expected to reach a record 170.9 mmt, driven by yield improvements. Abiove raised its soybean oil export forecast by 27.3%, attributing the increase to the government’s decision to maintain the biodiesel blend at 14%. This policy supports domestic demand, counteracting the potential downward pressure from lower soybean prices. While competitive pricing may enhance export opportunities, sustained biodiesel demand is likely to keep soybean oil prices firm in the near term, reinforcing market stability.
The United States’ (US) soybean oil prices surged to USD 0.96/kg in W13, marking a 3.23% WoW increase. The rise is linked to ongoing but unofficially disclosed meetings between oil and biofuel industry representatives, reportedly encouraged by the US administration to reach a consensus on biofuel mandates. Market volatility persists due to uncertainty surrounding federal biofuel policies, but the talks have sparked optimism, leading to sharp gains in soybean oil contracts. Given soybean oil's crucial role in biodiesel production, its price movements remain a key factor in supporting US soybean prices, particularly amid trade tensions with China that have already pressured US soybean FOB values relative to Mercosur-origin soybeans.
The Netherlands' soybean oil prices rose to USD 1.19/kg in W13, reflecting a 0.85% WoW increase and a significant 23.96% YoY surge. As a key European trade hub, the country imports nearly all its soybean supply, with the Port of Rotterdam facilitating distribution across the European Union (EU). Rising regional demand, coupled with a strengthening euro, is expected to sustain upward price pressure. However, potential supply chain disruptions or shifts in European renewable energy policies could introduce volatility, influencing future price trends. Market participants should monitor regulatory developments and trade flows, as any shifts may impact pricing dynamics in the coming months.
Global buyers should closely track government decisions regarding export taxes and biodiesel mandates in Argentina and Brazil, as tax and policy uncertainties persist. Early identification of favorable shifts could allow for more competitive pricing and smoother sourcing from these regions. Additionally, securing contracts with suppliers in countries like Brazil, where export forecasts are rising, may ensure stable supply at favorable rates.
The surge in soybean oil prices in markets like the US and the Netherlands highlights the need for price risk management. Importers and processors should diversify their supply chains by exploring alternative sourcing options, including tapping into global markets such as Argentina and Brazil. Establishing relationships with multiple suppliers can help mitigate risks associated with policy shifts or market disruptions in any single region.
Sources: Tridge, Ukr AgroConsult, Jago News 24, Bichos de Campo, Yahoo! Finanzas
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