Soybean oil prices continue to rise amid tight supply

Global soybean oil exports continue to decline, hitting a 10-year low in October amid a poor 2022/23 soybean crop in Argentina, the world’s top soybean oil producer and exporter.

According to Oil World, total exports of soybean oil from Argentina, Brazil, Paraguay, the United States and Ukraine in October decreased compared to September from 559,000 tons to a 10-year low of 386,000 tons, which is significantly lower than the 466,000 tons in October 2022. A for 10 months of the current year, the total export of soybean oil decreased by 0.9 million tons to 6.4 million tons, which is a 9-year minimum.

Thus, in October, the export of soybean oil decreased compared to September:

• from Brazil – from 155 to 83 thousand tons, of which 3 thousand tons were purchased by India, 39 thousand tons by China, 18 thousand tons by Algeria,
• from Argentina – from 315 to 225 thousand tons,
• from Ukraine – increased from 16.5 thousand tons to 29 thousand tons (12 thousand tons in August).

For 10 months of 2023, Brazil exported 2.1 million tons of soybean oil, and Argentina – 3.4 million tons (compared to 3.9 million tons for the same period in 2022). In 2022/23, Ukraine exported 277,000 tons of soybean oil, or an average of 19,000 tons per month.

December soybean oil futures on the Chicago Mercantile Exchange rose 4.2% to $1,193/t from Monday (+9.5% for two weeks, +4.2% for the month, -18% for the year).

The main reason for the increase in soybean oil prices is unfavorable weather for the future soybean harvest in Brazil. At the same time, the weather in Argentina favors the sowing of soybeans, and the new president promises to liberalize exports, which will lead to an increase in supplies to the world market, including soybean oil.

Analysts say soybean oil has lost its share of the global vegetable oil market due to lower prices for palm, sunflower and canola oils. First of all, this is due to the high domestic demand for soybean oil from the biofuel industry in the USA and Brazil, which, despite the increase in production in both countries, has led to a reduction in export offers.

Palm oil quotes for the week traded flat at $840/t (+1.2% for the week, +6.5% for the month), while sunflower oil prices for delivery to buyers in the fortnight rose 5.9% to $900/t due to increased demand from Asian buyers following the resumption of supplies from Black Sea ports.

Barchart raised its forecast for U.S. soybean production by 4 million tons to 122.6 million tons due to increased preharvest acreage and yields, as well as dry weather during harvest.

In central Brazil, in particular in the state of Mato Grosso, lower temperatures and increased precipitation are expected this week, while in other states the weather conditions are much more favorable for sowing soybeans. Against this background, the local agency Abiove left the forecast for the country’s soybean harvest at 164.7 million tons, while the USDA estimates it at 163 million tons, which will increase the pressure on soybean and soybean oil quotations in the near future.

Tags: prices, supply and demand balance, soybean oil