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Trade4go
Jan 24th, 2025
Original content
India's soybean oil imports surged in Dec-24, increasing to 420,000 metric tons (mt) from 152,600 mt in Dec-23, driven by significant price discounts on South American supplies. This shift occurred alongside reduced Malaysian palm oil exports, with palm oil's market share dropping to 42%, while soybean and sunflower oils accounted for 58% of imports. Sunflower oil imports saw a slight increase to 264,800 mt. Total vegetable oil imports declined marginally to 1.23 million metric tons (mmt) from 1.31 mmt a year earlier. India's growing preference for competitively priced soybean oil reinforces its position as a key market for global palm and soybean oil producers in 2025.
According to the National Oilseed Processors Association (NOPA), the United States (US) soybean crushing reached a record 205.498 million bushels in Dec-24, driven by ample supply and expanded processing capacity with new plants in Kansas and North Dakota. This marks a 6.4% increase from Nov-24 and a 5.2% rise from Dec-23. Soybean oil stocks were estimated at 1.531 billion pounds (lbs) as of December 31, 2024, up 15.6% month-on-month (MoM) but 7.9% lower year-over-year (YoY).
In its Jan-25 World Agricultural Supply and Demand Estimates (WASDE) report, the United States Department of Agriculture (USDA) raised its forecast for US soybean oil exports to 1.6 billion lbs for the 2024/25 marketing year (MY), a 46% increase from the Dec-24 projection, 159% higher than the 2023/24 estimate, and 323% above the 2022/23 level. This adjustment reflects a surge in global demand, partly driven by rising palm oil prices. Despite the strong export growth, US soybean oil stocks are forecast to rise slightly to 1.531 billion lbs, supported by record domestic crushing rates. India, a major palm oil importer, has become the top buyer of US soybean oil, taking advantage of lower prices, which have dropped 24% YoY to USD 0.3875/lb in early Jan-25. However, potential constraints from lower soybean production and biofuel policy uncertainty may impact future export dynamics.
Argentina's soybean oil prices have experienced a notable rise in W3, reaching USD 1.05 per kilogram (kg), marking a 3.96% increase compared to the previous week and a 25% YoY rise. The rise in prices can be attributed to multiple factors, including Argentina's significant role in global soybean oil production and export. The country’s strong production capacity, especially following the 45% production increase in 2024, supports both domestic consumption and export demands. As the world's leading exporter of soybean oil, with key markets in India, China, and Bangladesh, the price dynamics in Argentina are heavily influenced by global supply and demand.
Given the importance of soybean oil within Argentina's agricultural export sector, the ongoing price trends could have implications for both domestic and international markets. The production increase following the drought recovery may help stabilize domestic supply, but higher export prices could challenge price competitiveness in key markets. Furthermore, Argentina's significant export share suggests that any fluctuations in global demand or competition from other major producers like Brazil may continue to influence future price movements.
In W3, Brazil's soybean oil prices reached USD 1.20/kg, reflecting a 3.45% week-on-week (WoW) increase and an 8.11% YoY rise from USD 1.11/kg. This price uptick is largely driven by expectations of a record soybean harvest, which has bolstered domestic production.
However, despite the strong harvest, the depreciated Brazilian real previously exerted downward pressure on prices, particularly in light of lower-than-expected soybean export projections for Jan-24. Brazil’s soybean exports are estimated to total 1.71 mmt for Jan-24, a decline from the 2.40 mmt projected for the same month last year, although it represents a slight increase compared to Dec-24’s 1.47 mmt. This reduction in export volumes may increase domestic supply, potentially leading to downward pressure on soybean oil prices in the short term.
Brazil's future soybean oil prices will depend on several factors, including the balance between production and export demand, the value of the Brazilian real, and overall global market conditions. If export volumes remain low or global demand softens, Brazil may face challenges in maintaining higher price levels. Conversely, if export demand strengthens, prices may stabilize or rise further, especially considering the high level of production expected.
In W3, US soybean oil prices rose to USD 1.01/kg, marking a 9.78% WoW increase, though prices are still 2.88% lower than the same period last year. The USDA has significantly raised its soybean oil export forecast for the 2024/25 MY, reflecting a surge in global demand, particularly from India. This demand increase is partly fueled by rising palm oil prices. Despite this strong export outlook, US soybean oil stocks are expected to rise slightly due to record domestic crushing rates. The USDA's adjustment suggests that export growth will help support higher soybean oil prices in the short term.
However, future price movements may be influenced by factors such as potential limitations from reduced soybean production and uncertainties surrounding biofuel policies. If these issues persist, they could constrain export growth and potentially put downward pressure on prices.
In W3, soybean oil prices in the Netherlands rose to USD 1.13/kg, reflecting a 5.61% WoW increase and a 17.71% YoY rise from USD 0.96/kg. The increase in Dutch soybean oil prices is partly driven by higher agricultural export values, which rose by 4.8% in 2024, with higher commodity prices accounting for most of the growth. As Europe's largest importer of soybean and palm oil, the Netherlands' pricing dynamics are influenced by both global supply conditions and domestic re-export activities. With the country playing a key role in the European oilseed market, higher soybean oil prices are linked to global price increases, such as those driven by tighter supplies or rising demand from key markets.
Capitalize on India's growing demand for competitively priced soybean oil by prioritizing exports to this market, leveraging price advantages over palm oil and sunflower oil. Strengthen distribution channels in India to secure long-term market share amid shifting import preferences.
Enhance processing and crushing capacity, similar to recent US advancements, to meet rising global demand. Focus on optimizing production to maintain price competitiveness in key markets like India, China, and the EU, while mitigating the impact of potential supply constraints or policy changes.
Regularly assess global price trends, particularly in South America and Southeast Asia, to adjust export strategies and maintain competitiveness. Develop pricing strategies that balance profitability with market accessibility in high-demand regions, especially as global soybean oil prices remain volatile.
Sources: Tridge, UkrAgroConsult, Yahoo! Finanzas, Dutch News, News Agrofy
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