Global Output Growth and Trade Patterns Signal New Direction of Soybean Oil Market

In the coming months, the Soybean Oil market is expected to gain competitiveness relative to other vegetable oils, driven by higher production and shifts in global demand. The latest projections for global Soybean Oil production for the period from October 2024 to September 2025 have been revised upwards to an estimated of around 66 million tons, which marks an increase of over 3 million tons compared to the previous year. This production boost could help meet the rising demand from import-dependent countries; however, export dynamics will play a key role in determining availability and price stability for Soybean Oil in international markets. Brazil, currently a leading global exporter, will likely see a notable decline in its Soybean Oil exports starting in 2025 due to domestic policy changes. Specifically, the biodiesel blending mandate in Brazil will increase to nearly 15% in March 2025, requiring more Soybean Oil for domestic biodiesel production and thereby reducing export volumes. With Brazil’s reduced presence in the export market, Argentina’s Soybean Oil exports are expected to fill the gap, as Argentine processors ramp up shipments to meet heightened demand from importing nations.

This shift in export volumes comes at a time when stocks in the United States remain unusually low, limiting its capacity to serve as a substitute source in the short term. As a result, Soybean Oil importers which have traditionally relied on sunflower and rapeseed oils, are increasingly turning to Soybean Oil due to a significant drop in the availability of these alternative oils. The sustained demand from these countries could rapidly absorb the expected surplus of Soybean Oil, leading to a potential tightening of supply and upward pressure on prices from various regions including the US. In the broader market, the increased focus on Soybean Oil production has created a surplus of soybean meal, a byproduct of Soybean Oil extraction, which has begun to impact crushing margins. Soybean processors are now facing pressure to maintain profitability amidst an oversupply of soybean meal that has softened its market value. To offset this, processors are anticipated to increase the price of Soybean Oil in the medium term to sustain their margins, particularly if meal prices remain low. As global markets adjust to these production and policy changes, Soybean Oil’s pricing outlook remains subject to fluctuations. With demand projected to stay strong, especially in light of limited supplies of competing oils, industry analysts expect prices to experience moderate upward pressure in response to tightening stocks and rising international demand, setting the stage for a dynamic year in the vegetable oil market.