The United States Department of Agriculture (USDA) Foreign Agricultural Service has released its latest Oilseeds: World Markets and Trade report, forecasting significant shifts in the soybean oil market. The U.S. soybean oil price premium compared to other major exporters has declined, positioning the United States to become a net exporter of soybean oil in the 2024/25 marketing year.
Previously, the U.S. held a price premium driven by high domestic demand for soybean oil in biofuel production, particularly for renewable diesel destined for the California market. This premium peaked in the summer of 2023 but has since decreased as other feedstocks like tallow, yellow grease, and used cooking oil gained prominence due to California's policy incentives. Consequently, soybean oil's share in biofuel feedstock consumption dropped from nearly 45% in early 2022 to below 35% in early 2024.
U.S. soybean oil production is forecast to reach another record high in 2024/25, driven by a 4% increase in domestic demand. This rise in production, coupled with lower imports and a modest recovery in exports, is expected to result in a 10% increase in ending stocks, while prices are anticipated to decline.
In South America, the 2024 soybean harvest is concluding, with soybean complex prices under pressure due to larger global supplies compared to last year’s drought-affected production in Argentina. Increased soybean meal exports, driven by higher demand for global protein meals, have lifted export figures for Argentina, Brazil, and the United States. Between January and May 2024, combined soybean meal exports from these three countries reached nearly 27 million tons, over 20% higher than the same period last year. Despite a smaller soybean crop, Brazil's crush has been at a record high, while the U.S. benefited from weaker Argentine competition early in the year, pushing its exports 16% higher than the same timeframe last year.
2024/25 Overview:
- Global oilseeds production forecast lowered by over 1 million tons to nearly 686 million tons, primarily due to reduced Australian rapeseed outlook.
- Global oilseeds trade down, reflecting lower Australian rapeseed exports.
- Oilseed ending stocks forecast down nearly 1 million tons due to reduced Brazilian soybean and global rapeseed stocks.
- Global crush trimmed on reduced rapeseed utilization.
- Global meal trade up nearly 200,000 tons on higher U.S. soybean meal exports.
- Global vegetable oil trade slightly down on reduced EU and UAE rapeseed oil exports.
- U.S. season-average farm price for soybeans remains unchanged at $11.20 per bushel.
2023/24 Overview:
- Global oilseeds production forecast lowered due to reductions in Brazilian soybeans and Indian peanuts, partially offset by an increase in Ukrainian rapeseed.
- Global oilseeds trade slightly up on higher Ukrainian rapeseed exports, despite lower Canadian rapeseed exports.
- World ending stocks down nearly 600,000 tons due to a decline in Brazilian soybean stocks.
- Oilseed crush trimmed on lower Indian peanut crush.
- Global protein meal exports higher, driven by larger U.S. and Indian soybean meal exports.
- Vegetable oil trade largely unchanged.
- U.S. season-average farm price for soybeans remains unchanged at $12.55 per bushel.
Export Prices:
- Soybean prices for major exporters have declined due to improved U.S. plantings and ample global supply projections.
- Soybean meal prices also fell, reflecting weaker soybean prices and ample supplies from major producers.
- South American soybean oil prices appreciated significantly due to strong domestic demand in Brazil.
- Weather-related concerns in Europe boosted vegetable oil prices, particularly for rapeseed.
