Sharp rise in soybean oil and crude oil quotes in Chicago supported vegetable oil prices

July soybean oil futures in Chicago rose 6% to $1,112/t on Friday (+3% for the month) and have now reached $1,164/t (+11% from Thursday) amid a sharp 7% jump in oil prices caused by Israeli strikes on Iran and the US government’s decision to sharply increase US biofuel production mandates for 2026 and 2027 by more than producers had requested.

The start of an open war between Israel and Iran and information about the possible US joining the strikes on Iran led to a sharp increase in August Brent crude futures by 14% in a week to $76.5/barrel (+17.7% in a month), which supported vegetable oil prices.

But the main driver of soybean oil price growth in Chicago was the unexpected proposal by the US Environmental Protection Agency (EPA) to increase renewable biofuel production commitments to 5.61 billion gallons by 2026 and 5.86 billion gallons by 2027, significantly exceeding the 3.35 billion gallons set for 2025 and the 5.5 billion gallons proposed by the oil and biofuel industries by 2031.

Against this background, from Friday to Monday, July soybean oil futures in Chicago rose by 15.8% to $1,214/t (+11% for the month), although soybean prices remained almost unchanged, and local traders even sharply reduced purchase prices for new crop soybeans.

ADM, a major U.S. soybean and biofuel producer, cut its forward prices for new crop soybeans this week, setting a $7.4/t discount to November futures, with physical prices at times trading at a discount of up to $22/t to the $392.4/t futures. This is due to expectations that China will stop importing U.S. soybeans and an increase in supply for processing. ADM also lowered base rates at its other processing plants, which some rival processors, including Cargill, later followed.

It is worth noting that on the Chinese Daylian exchange, the price of soybean oil for delivery in June is $1,120/t, while the price of Brazilian soybean oil remains at $1,070-1,080/t FOB Brazil, amid increased supplies of Brazilian soybeans to China and large stocks of soybean oil and meal due to a record harvest in Brazil.

August palm oil contracts on the Bursa Malaysia exchange rose 5.9% to 4,064 MYR/t or $959/t over the week amid increased palm oil exports from Malaysia, which, according to local surveyors, grew by 17.7-26.3% in the first 15 days of June.

Prices for sunflower oil delivered to India increased by only $20/t to $1,200/t CIF Mumbai in a week, which is due to active purchases of cheap palm oil.

Prices for crude sunflower oil in Ukraine increased by $10-15/t to $1,100-1,115/t for delivery to Black Sea ports in a week, while prices for Russian sunflower oil remain at $1,120-1,130/t FOB.

The vegetable oil market will remain under strong pressure from large inventories and falling demand, as well as increased supplies of new crop rapeseed oil.

Due to the strengthening of the euro, the price of rapeseed oil in the EU has risen to $1,277/t FOB Netherlands for delivery in June, so international buyers will actively purchase cheap soybean oil from South America and palm oil from Asia.

Tags: Ukraine, sunflower oil, prices, palm oil, edible oils, rapeseed oil