Vegetable oil prices rose slightly, but could be adjusted by new US tariffs and uncertainty about demand from the biofuel industry

Vegetable oil prices have started to rise on a recovery in demand, led by Indian demand for cheap palm oil. Meanwhile, soybean oil prices in Chicago are holding high on expectations of a significant increase in biofuel mandates.

The Environmental Protection Agency (EPA) on June 13 proposed significantly higher than expected renewable fuel standard (RFS) volumes for biomass-based diesel, after which soybean oil futures in Chicago rose by 17% in two days, but then fell and are now trading at $1,190/t (+13.7% month-over-month).

The final decision on biofuel mandates will not be ratified before November, and the reduction in subsidies for electric vehicle production in the new law shows that Trump’s campaign promise to reduce support for “green” energy may come true, and the declared volumes will not be approved in November.

On the Dalian exchange, soybean oil quotes remain at $1,120/t, while the price of Brazilian soybean oil has increased by $10-20/t over the week to $1,100-1,115/t FOB Brazil.

September palm oil futures on the Bursa exchange in Malaysia rose 4.6% in a week to a 3-month high of 4,149 MYR/t or $979/t (+0.6% in two weeks) on forecasts of increased demand from India and even the US.

The Indonesian Palm Oil Producers Association (GAPKI) predicts that the US imposition of a 32% tariff on Indonesian goods will reduce palm oil exports to the US by 15-20%. Over the past 3 years, of the 24 million tonnes of oil exported by Indonesia annually, an average of 2.25 million tonnes was shipped to the US.

Indonesian palm oil products, which account for 85% of U.S. palm oil imports, could be displaced by Malaysian palm oil, which has lower tariffs. Trump’s spontaneous and haphazard tariff policy continues to roil markets and disrupt supply chains, leading to further price spikes.

Prices for sunflower oil delivered to India increased by $5/t to $1,195/t CIF Mumbai in a week, while the offer prices for Russian oil increased by $15-20/t to $1,120-1,135/t FOB in a week.

In Ukraine, export prices for sunflower oil delivered to Black Sea ports also increased to $1,110-1,120/t amid a decrease in supply and an increase in demand prices from EU buyers to $1,200-1,220/t due to the strengthening of the euro against the dollar.

Prices for rapeseed oil for delivery in July increased by $10-20/t to $1,260-1,270/t FOB Netherlands during the week, against the backdrop of a slight increase in oil prices.