Soybean Oil Prices – Historical Graph

Real-time chart of historical daily soybean oil prices. The prices are shown in KG.
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Soybean Oil Prices Explained

From a surplus commodity, soybean oil emerged as the most coveted vegetable oil after the world witnessed the Chinese economy’s short economic rebound, the ongoing war between Russia and Ukraine, and the US escaping inflation. 

The tightening of oil supply due to OPEC’s production restriction and the demand for green energy sources give way to the renewable diesel production which spikes soybean oil prices to another level. However, things don’t always go the way we see it as soybean supply in the US and South America prove to be an offset to its increasing demand.

This and the other factors resulted in a diverging demand and supply of soybean oil which made soybean oil prices modest for the past three months.

Why are soybean oil prices fluctuating?

1. U.S. Soybean Production

The improved soybean farming conditions in the U.S. ( the second largest soybean oil producer ) mean healthy production for 2024, fueling large domestic consumption in the country and rebuilding of export inventory.

Additionally, the U.S. Energy Information Administration data showed more soybean processing plants are constructed to accommodate the rising demand for renewable oil production. This means that the country’s crushing capacity doubles its usual manufacturing performance. An excess soybean oil inventory is in the making. Thus, its production outpacing supply can have minimal impact on soybean oil prices.

2. Alternative Vegetable Oils

Intensified supply constraints due to Russia’s withdrawal from the Black Sea Grain Trade means low availability of canola and sunflower oils, Ukraine’s top oil exports.

While Ukraine’s Black Sea transportation problem finds another way through rails and rivers, these alternative routes are expensive. This gives leverage to the marketability of soybean oil (the second most consumed vegetable oil).

However, its availability might be short as Argentina ( the fourth-largest producer of soybean oil ) suffers a soybean crop disaster this year due to the country’s historic drought.  Thus, this tug of war between demand and supply creates soybean oil price fluctuations.

3. Biofuel

The demand for consistent biofuel production is the top soybean oil price mover as soybean is the major feedstock for biodiesel.  For example, domestic soybean crushing is quite strong in the U.S. as the country strengthens its renewable oil production to pacify its demand for fuel.

California is the major proponent of this law. The state doesn’t only work on reducing its fuel dependency but strives to lessen its carbon emissions by biofuel burns.  Additionally, Canada’s newly implemented low-carbon fuel standard is another soybean oil price booster.

While these elements look promising from the market perspective, the industry needs to deal with pressing concerns from its European trade as deforestation for soybean acreage gives rise to sustainability concerns.

Which variables impact the price of soybean oil?

  • U.S. Soybean Production
  • Alternative Vegetable Oils
  • Biofuel
  • Weather
  • Government Policies
  • Speculative Trading

Where does soybean oil come from?

Soybean oil is the world’s second-largest source of vegetable oil and 90% present of all US oilseed production due to its high smoke point and affordability. 

The first record of soybean oil dates back to the 11th century in China as one of the country’s five main plant foods. Exported as a fertilizer, it spread across Europe in 1700 and the first US soybean crop surfaced in 1829. During the Civil War, soldiers used this as a coffee substitute and farmers planted soybeans as a forage crop. 

George Washington Carver, an African-American agricultural scientist and inventor, discovered soybean’s rich protein and oil content. As a result, its cultivation further intensified in the US during World War 2 as its oil topped as the first alternative source of vegetable oil. 

There are two main methods of making soybean oil:

1. Mechanical Pressing – The traditional method of oil extraction. It involves crushing the soybeans to release the oil and the oil is separated from the solids. This method is less efficient than solvent extraction but it produces a lower quality oil that is more natural.

2. Solvent Extraction – This modern method of oil extraction uses solvents such as hexane to dissolve the oil from the soybeans. This technique is more efficient than mechanical pressing which produces a stable and higher oil quality. 

Generally, mechanical pressing is good for small-scale production while solvent extraction is for larger-scale production. 

What are the uses of soybean oil?

Soybean oil’s versatility produces various uses such as:

1. Cooking oil – Soybean oil is a popular cooking oil because it has a high smoke point which means it can withstand high temperatures without breaking down and smoking. This makes it ideal for frying, baking, and other high-heat cooking methods.

2. Salad dressing – Due to its mild flavor that does not overpower the other ingredients, soybean oil becomes a common ingredient in salad dressings. Additionally, it is a good source of omega-6 fatty acids which are essential acids that the human body needs.

3. Margarine – Soybean oil is a major ingredient in margarine, a spread that is a good substitute for butter. Margarine is made by hydrogenating soybean oil which changes the chemical structure of the oil and makes it solid at room temperature.

4. Biodiesel – Soybean oil is also a major component in making biodiesel, a renewable fuel that can be used in place of diesel fuel. Biodiesel is made by chemically reacting soybean oil with methanol or ethanol.

Today, this flexible vegetable oil comes from top-producing countries such as China, the United States, Brazil, Argentina, and the European Union. With the combined production, these countries produced nearly 75% of the global soybean oil.

What is the future price of soybean oil?

The soybean oil season from the top producing and consuming countries varies according to its planting and harvesting season. Here’s a more definitive outlook:

China – The world’s largest soybean oil producer and consumer. China’s soybean oil season runs from October to September. The majority of soybeans are planted in the spring and harvested in the fall.  Additionally, the country’s soybean oil imports account for 25% of the global demand.

This increase is due to a combination of factors such as the decline in domestic soybean production and rising demand from the food and industrial sectors.

The U.S. – September to August is the US soybean oil season. The world’s second-largest soybean producer and exporter is expected to produce 58.5 million tons of soybean oil in the 2023/2024 trading season.

Brazil – The country’s soybean oil season runs from September to August. The country’s production in 2023 and next year will be down by 2 million tons due to the severe drought which affected its soybean crop yields.

Argentina – Argentina’s soybean oil is from spring to summer ( September – March ). Similar to Argentina, the country suffers dry weather which heavily affected its production by 2%.

While soybean oil prices have been at moderate levels recently, its supply and availability always come after the increasing need for biofuel coupled with the growing demand for edible oils due to the disrupted supply chain in the Black Sea.

Thus, market analysts forecast that the average price of soybean oil in 2030 will be around $1,000 per metric ton. However, it is important to note that this is just an estimate and the actual price may vary depending on several factors such as weather conditions, crop yields, and global economic conditions.

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