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Trade4go
Dec 20th, 2024
Original content
Argentina's soybean oil exports reached record levels in Oct-24, with 636,000 metric tons (mt) shipped—the highest in 17 years. From Jan-24 to Oct-24, cumulative exports totaled 4.776 million metric tons (mmt)–the second-highest in history– driven by rising international prices and increased demand. India remains the top buyer, absorbing nearly 2 mmt, while Chinese purchases quadrupled their six-year average, reaching 464,000 mt.
Free on board (FOB) prices for Argentine soybean oil showed competitive strength, trading 14% above Chicago Board of Trade (CBOT) benchmarks. Despite a decline from Nov-24's USD 1,180/mt to USD 1,117/mt in Feb-25, industry purchasing power has improved due to favorable milling margins and robust export performance. With preliminary Nov-24 exports exceeding 630,000 mt, the upward trend in exports continues, supported by a global shortage of vegetable oils and Argentina's competitive positioning in volume and pricing.
The Ministry of Commerce in Bangladesh has raised soybean oil prices by USD 0.067 per liter (BDT 8/L) due to a 20% increase in international market prices. As of W50, bottled soybean oil costs USD 1.46/L (BDT 175/L), and loose soybean oil decreased to USD 1.31/L (BDT 157/L). Previously, these were priced at USD 1.40/L (BDT 167/L) and USD 1.25/L (BDT 149/L), respectively.
The Bangladesh Edible Oil Association president stated that the new rates were determined using a formula accounting for import duties, Letter of Credit (LC) value, and processing costs. The international price is USD 1,200/mt. After discussions with the Ministry of Commerce, the pricing formula will now be reviewed monthly.
The Ministry of Commerce advisor noted that the adjustments aim to stabilize the market amid traders' local stockpiling. The changes take effect immediately, and adequate supply is assured. Lastly, no decisions regarding palm oil were made at the meeting.
Bolivia has suspended exports of refined soybean oil to address domestic supply shortages and stabilize local prices. The president of the Chamber of Industry and Commerce (Cainco) criticized the move, labeling it a mistake amid the country's balance of payments crisis, which requires foreign currency inflows. Representing over 14,000 soybean producers, Bolivia's Association of Oilseed and Wheat Producers (Anapo) warned that the restriction could push the industry toward bankruptcy.
The Vice Minister clarified that the suspension does not affect other soybean derivatives like flour and assured exports would resume once domestic supply normalizes. However, concerns persist over rising food prices.
Due to rising palm oil prices, India significantly increased soybean and sunflower oil imports in Nov-24. According to the Extractors Association India (SEA), total vegetable oil imports rose 12% month-on-month (MoM) to a record 1.628 million metric tons (mmt), 40% higher than Nov-23. Soybean oil imports surged to 407,648 mt, driven by competitive pricing, mainly from Argentina.
The import surge has pressured domestic oilseed prices, dropping them to USD 49.93 to 50.51/quintal (INR 4,250 to 4,300/quintal), below the minimum retail price of Rs 4,892/quintal. This has strained local processors, who are already facing challenges with uncompetitive soybean meal exports. The SEA Association has urged the government to lift the suspension on futures trading for soybeans and related commodities to support the market. As of December 1, 2024, vegetable oil stocks rose to 2.569 mmt, up by 161,000 mt from the previous month, with soybean oil stocks at 173,000 mt.
The United States Department of Agriculture (USDA) Dec-24 World Agricultural Supply and Demand Estimates (WASDE) report highlighted a sharp increase in US soybean oil export projections for 2024/25, driven by higher palm oil prices. The export forecast was raised 83% to 1.1 billion pounds (lbs), with Oct-24 exports already reaching 85% of the prior 600 million lbs estimate. Soybean oil carryover for Oct-25 was reduced to 1.506 billion lbs, down 2% from Nov-24.
A 270-million lb rise in soybean oil production and a 200-million lb decline in domestic industrial usage adjusted the balance sheet to accommodate increased exports. Biofuel usage remained unchanged at 14 billion lbs, an 8% year-on-year (YoY) increase. Soybean prices for 2024/25 were forecast at USD 10.20 per bushel, down 18% from the previous year.
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Argentina's soybean oil prices stood at USD 1.06 per kilogram (kg) in W50, marking a 21.84% YoY increase. Record exports in Oct-24, totaling 636,000 mt, highlighted robust demand and competitive pricing, with cumulative exports from Jan-24 to Oct-24 reaching 4.776 mmt, the second-highest in history. Furthermore, FOB prices demonstrated Argentina's competitive strength, trading 14% above CBOT benchmarks. Although prices declined from USD 1,180/mt in Nov-24 to USD 1,117/mt in Feb-25, favorable milling margins and strong export dynamics bolstered industry purchasing power.
In W50, Brazil's soybean oil prices rose to USD 1.25/kg, a 1.63% week-on-week (WoW) increase. The Brazilian Association of Vegetable Oil Industries (Abiove) forecasts record production and exports for 2025, with soybean oil output reaching 11.4 mmt and exports remaining at 1.05 mmt. Supported by rising production and crushing volumes, total export revenues for the soybean complex are projected at USD 50.8 billion. However, environmental concerns loom as new state laws threaten the Amazon soy moratorium, potentially incentivizing deforestation. Critics argue that these changes undermine commitments to sustainable practices despite the moratorium's role in significantly reducing deforestation.
United States (US) soybean oil prices increased to USD 0.94/kg, reflecting a 2.17% WoW rise but a significant 14.55% YoY decline. The US soybean market faces additional challenges from potential trade tensions with China in 2025, which could exacerbate a declining price trend.
Soybean futures have fluctuated following tariff proposals, with current prices projected at USD 10.20 per bushel for the 2024/25 marketing year (MY) — a 6% decrease from previous estimates and an 18% drop from the prior year. Analysts warn that potential Chinese tariffs could reduce prices by up to USD 1/bushel, threatening farmer profitability, which has already been strained by falling real cash income. Compounding these pressures, South American competitors like Brazil and Argentina continue to expand soybean production. Brazil’s soybean exports are projected to reach a record 97 mmt in 2024-25, with China accounting for over 76% of this volume. The growing reliance on South American supply underscores a shift in global trade dynamics that could further challenge US market competitiveness.
In W50, soybean oil prices in the Netherlands remained stable at USD 1.10/kg despite a 3.51% MoM decline. Future price movements are uncertain due to regulatory challenges from the European Union Deforestation Regulation (EUDR). As a key importer and re-exporter of soybean oil, the Netherlands faces potential disruptions in its supply chain as the EUDR aims to limit the trade of products linked to deforestation. Regulatory compliance and possible reductions in import volumes may increase operational costs, ultimately raising soybean oil prices in early 2025.
To capitalize on the growing global demand for soybean oil, particularly in emerging markets like India and China, stakeholders should expand their export strategies to include a broader range of countries. As Argentina's soybean oil exports have surged, exporters must explore additional markets and reduce reliance on a limited number of buyers. This will help mitigate risks from potential geopolitical shifts, market fluctuations, or supply chain disruptions. Establishing long-term trade agreements with new buyers while strengthening ties with key partners like India and Brazil can provide stability and ensure continued growth in export volumes.
In response to the rising costs of soybean oil, particularly in markets like Bangladesh and India, businesses should optimize their domestic supply chains by negotiating favorable pricing terms and enhancing local distribution efficiency. This includes collaborating with suppliers to lock in more favorable pricing agreements, leveraging economies of scale, and reducing the impact of fluctuating international prices. Additionally, companies should consider diversifying their oil portfolios by incorporating other vegetable oils to balance pricing pressures and ensure continued supply amidst market volatility.
As concerns over environmental impacts rise, especially regarding deforestation and unsustainable practices in South America, stakeholders should prioritize sourcing soybean oil from suppliers with verified sustainability certifications. This can mitigate reputational risks associated with environmental concerns and align with increasing consumer demand for sustainably produced goods. Investing in sustainable practices such as traceability and certifications and engaging in supply chain transparency can help strengthen brand reputation and ensure long-term market access, particularly in regions with stricter environmental regulations like the European Union (EU).
Sources: Tridge, TBS News, Grain Trade, Ukragroconsult, The Albertan, Canal Rural, De Frente Al Campo, La Republica
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