"The USA will become a major exporter of soybean oil by 2024/25 due to the reduction in subsidies and an increase in production."

Reduction in Premium for Soybean Oil in the USA Against Competitors

In the USA, there is a decrease in the premium for soybean oil compared to other major exporters. It is expected that the USA will become a major exporter of soybean oil by the year 2024/25. The rise in prices in recent years is due to increased demand for soybean oil for the production of biofuels, especially renewable diesel fuel supplied to the California market.

The demand for American soybean oil has surpassed the demand for Argentinean oil, reaching its peak in the summer of 2023 when the production of renewable diesel fuel increased. Subsequently, the share of soybean oil used for biofuel production decreased due to the wider use of other raw materials such as lard, yellow fat, and used vegetable oil for food preparation, driven by California's policies. Thus, the share of soybean oil in total raw material consumption dropped from 45 percent in early 2022 to less than 35 percent in early 2024.

It is expected that soybean oil production in the USA will reach a new record level in 2024/25 due to a 4 percent increase in domestic demand. At the same time, the USA will become a net exporter of soybean oil by reducing imports and moderately recovering soybean oil exports from other countries. It is anticipated that final soybean oil stocks in the USA will increase by 10 percent and prices will decrease, as reported by oilworld.ru, citing USDA.

Increase in Global Soybean Meal Export in Early 2024

The soybean harvest season in South America is coming to an end, and soybean meal prices continue to remain low. Global soybean meal exports have increased compared to the previous year when soy production decreased, and Argentina suffered from drought. The increase in soybean meal exports has led to growing global demand for high-protein products.

According to oilworld.ru, the volume of soybean meal exports from Argentina, Brazil, and the USA in January-May 2024 amounted to nearly 27 million tons, exceeding the same period last year by 20%. The most significant growth was registered in Argentina, where recovery from last year's drought led to increased soybean yields. In Brazil, despite unfavorable conditions related to lower soy yields, the collection level was record high.

Meanwhile, the USA took advantage of weakened competition from Argentina in the first quarter of this year. Soybean meal exports from the USA reached a new peak, surpassing last year's figures by 16%. Seasonal competition intensification from South America may impact future export supplies from the United States. However, with the increase in production capacities and the emergence of new market players, American soybean meal is likely to remain attractive to global buyers.

Review for 2024/25

The forecast for global oilseed production as of June 2024 noted a decrease by over 1 million tons to nearly 686 million tons due to reduced rapeseed yield in Australia. A reduction in global oilseed trade is also projected due to decreased rapeseed oil exports from Australia.

Final oilseed stocks are expected to decrease by nearly 1 million tons due to reduced soybean stocks in Brazil and rapeseed in the global market. The reduction in rapeseed oil usage is also reflected in reduced global sales, as reported by oilworld.ru, citing USDA data.

Soybean meal exports increased by almost 200,000 tons due to the growth in soybean meal supplies from the USA.

The total volume of global vegetable oil trade slightly decreased due to reduced rapeseed oil exports from the EU and UAE.

The forecasted average seasonal price for soybeans in the USA remains unchanged at $11.20 per bushel.

Review for 2023/24

As of June 2024, the forecast for global oilseed production noted a decrease due to reduced soybean production in Brazil and peanut production in India, offsetting increased rapeseed production in Ukraine. Global oilseed trade slightly increased due to export growth. Sunflower oil exports from Ukraine exceed the reduction in rapeseed exports from Canada.

Global final stocks decreased by nearly 600,000 tons due to reduced soybean stocks in Brazil. The decrease in oilseed production is also caused by a reduction in peanut harvest in India. Soybean meal exports increased due to the growth in soybean meal exports from the USA and India. The volume of vegetable oil trade remained almost unchanged.

The forecasted average seasonal farm price for soybeans in the USA remains unchanged at $12.55 per bushel.

Export Prices

Following the publication of the latest WASDE report on the expected increase in planting areas in the USA and anticipated global supply volumes, soybean prices decreased among major exporters. Soybean meal prices also fell due to declining soybean prices and increased deliveries from leading producers. However, significant soy price increases were observed in South America. Soybean oil prices rose mainly due to high domestic demand in Brazil. Issues with rapeseed crop due to unfavorable weather conditions in Europe also led to an increase in vegetable oil prices, according to oilworld.ru citing USDA.