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Trade4go
Jan 3rd, 2025
Original content
As of Nov-24, European Union (EU) soybean oil imports fell by 66% year-on-year (YoY), reflecting a broader 21% decline in overall oil imports for the MY 2024/25. However, total oilseed imports rose by 8% YoY, driven by increased purchases of soybeans and soybean meal. Soybean imports were 7% higher YoY, with crushing expected to yield additional soybean oil, offsetting reduced imports.
Higher sunflower oil prices and additional duties on Russian and Belarusian oilseeds have shifted EU demand toward alternative oilseeds and meals. Soybean meal imports rose 25% YoY to 7.64 million metric tons (mmt), addressing a traditional EU protein shortage in livestock feed.
Uncertainty surrounding the European Union Deforestation Regulation (EUDR) has spurred advanced purchases of soy-based products, while sustainability concerns continue to impact palm oil imports. The European Commission (EC) has delayed the EUDR implementation to Dec-25.
Soybean oil exports from Argentina have surged in 2023, driven by robust demand from key markets. India remains the primary destination, importing a record high of nearly 2 mmt of Argentine soybean oil. China follows with 464,000 metric tons (mt), which is four times its six-year average. Between Apr-24 and Nov-24, Argentina shipped 4.4 mt of soybean oil, ranking this campaign among the top three in Argentina's history. Nov-24 alone is projected to see over 630,000 mt exported, marking the highest November volume in 14 years.
Despite strong export volumes, domestic soybean prices in Argentina have declined, with inflation-adjusted values losing 10% of purchasing power since Sep-24. However, parallel exchange rates offer competitive pricing opportunities. The soybean complex's export value has reached USD 12.37 billion, up 45% from last year.
The Bangladesh Ministry of Commerce has raised the price of soybean oil. Bottled oil is now priced at USD 1.44 per liter (BDT 175/L), an increase from USD 1.37/L (BDT 167/L). Loose oil is priced at USD 1.29/L (BDT 157/L), up from USD 1.23/L (BDT 149/L). The adjustment follows a 20% rise in international soybean oil prices, currently at USD 1,200/mt.
Effective immediately, the revised rates were determined using a formula accounting for import duties, Letter of Credit (LC) value, bottling, and processing costs. A monthly price review based on this formula has been approved. Officials expressed confidence in maintaining supply stability despite the increase.
Bolivia Halts Refined Soybean Oil Exports to Peru Following Domestic Price Surge
Bolivia has temporarily suspended refined soybean oil exports to Peru following a 60% price increase in the Bolivian domestic market. This action is intended to address shortages and protect local consumers. Despite this, experts anticipate minimal impact on Peru's edible oil market, as tariff-free imports from countries like Brazil and Argentina can offset supply gaps.
India's soybean oil imports increased by 20% month-on-month (MoM) in Nov-24, reaching a three-month high of 410,000 mt, as refiners replenished stocks following strong demand during the festival season. Overall, vegetable oil imports rose 12% to 1.6 mmt, with sunflower oil imports climbing 43% MoM to a four-month high of 341,000 metric tons. India sources soybean oil primarily from Argentina and Brazil. This rise in imports reflects strong consumption driven by festivals such as Dussehra and Diwali, bolstering confidence among refiners in rebuilding inventories.
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Argentina's soybean oil prices decreased by 3% week-on-week (WoW) to USD 0.97 per kilogram (kg) in W52, although they have risen 16.87% YoY. This price shift reflects the country's weather challenges and increasing soybean production, driven by adverse conditions for corn. The shift toward more soybean cultivation while addressing reduced corn production could influence global soybean oil dynamics. Argentina's soybean production expansion and its significant crushing capacity for soybean oil may alter market trends, especially in light of reduced corn exports and the ongoing production challenges. This trend warrants close monitoring, particularly in comparison with Brazil's soybean output, as both countries hold substantial sway over global commodity prices.
In W52, Brazil's soybean oil prices decreased slightly to USD 1.21/kg, reflecting a 0.82% WoW drop and a 1.68% YoY increase. This price movement comes amid a significant expansion in Brazil's soybean processing capacity, driven by the 'Fuel of the Future' law, which aims to increase renewable fuel use. This policy mandates a rise in biodiesel's vegetable oil content, spurring a 34% increase in soybean oil demand. Despite this surge in domestic consumption, Brazil's soybean oil exports are expected to stabilize at 1 mmt annually, below the five-year average. The balance between rising domestic demand and stable export levels will likely influence future pricing trends.
United States (US) soybean oil prices fell to USD 0.88/kg in W52, reflecting a 1.12% WoW and 18.52% YoY decline. Despite this, the United States Department of Agriculture's (USDA) Dec-24 World Agricultural Supply and Demand Estimates (WASDE) report predicts an 83% increase in 2024/25 export volumes to 1.1 billion pounds (lbs), driven by competitive pricing against palm oil, which holds a USD 160/mt premium.
This export surge, coupled with a 2% drop in carryover stocks by Oct-25 and unchanged biofuel demand at 14 billion lbs, suggests tightening domestic supply. However, increased production, up to 270 million lbs, could buffer against sharp price hikes. Future pricing will depend on sustained global demand, competition from other vegetable oils, and domestic supply adjustments. Rising exports may provide price support, mitigating further declines while balancing against potential production growth.
In W52, the Netherlands' soybean oil prices remained steady at USD 1.05/kg despite broader market pressures. A 64% reduction in EU soybean oil imports for the 2024/25 MY has weakened demand and put downward pressure on prices, with a decrease of 4.55% MoM. Additional factors, such as the anticipated record soybean harvests in 2025 and growing concerns over biofuels derived from deforestation-linked feedstocks, are further depressing market conditions. The EU's Renewable Energy Directive (RED) and the EUDR are expected to influence soybean oil's future role in biofuels, potentially classifying it as a high ILUC (Indirect Land Use Change) risk and leading to reduced demand in the coming years.
Stakeholders should diversify their sourcing strategies to mitigate the impact of the decline in EU soybean oil imports and potential future regulatory changes. This could include increasing purchases from countries like Argentina and Brazil, where production and export levels remain strong. Given Argentina's record high export volumes and Brazil's expanding processing capacity, sourcing from these regions can help reduce dependence on the EU and maintain stable supply chains. By securing multiple suppliers, businesses can better navigate market volatility and regulatory shifts, such as the EUDR, which may affect future oil demand.
With US soybean oil prices significantly lower than in other regions, stakeholders should capitalize on these competitive pricing advantages to secure favorable contracts and lock in lower costs. As detailed in the USDA's report, increased exports and growing domestic production could support price stability in the US market. Importers in countries with strong consumption, like India, should focus on securing soybean oil at competitive prices lower than palm oil to enhance cost efficiency while meeting rising domestic demand driven by seasonal festivals.
Given the uncertainty surrounding the EUDR and its potential impacts on the biofuels sector, stakeholders should proactively adjust their strategies. Producers and exporters should monitor developments closely, prepare for potential delays, and explore opportunities in emerging markets less impacted by these regulations. Advanced purchases and securing long-term contracts with customers could help mitigate risks associated with the EU's sustainability concerns, ensuring continued demand for soybean oil despite regulatory hurdles.
Sources: Tridge, ON 24, Noticias Agricolas, AgroConf, TBS News, Ukragroconsult, Panamericana, Red River Farm Network, Iowa Agribusiness
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