The US soybean market has eased back & growing biodiesel demand

The US soybean market has eased back & growing biodiesel demand

Your Bi-weekly update on edible oils & fats by Aveno
September 25th, 2019

Palm oil

source: MPOB

In the past two weeks palm oil prices weakened due to an increasing Malaysian palm oil production and decreasing export numbers. Weakness in the energy complex, coupled with concerns over slow off take, as buyers remain relatively side-lined (in India in particular), led to the recent price weakness. On September 24th the market quoted $562.50/MT CIF Rotterdam

U.S. Soybean Oil Prices

On September 23rd the price of crude soybean oil in the U.S. was $0.2919 per pound.

source: Macrotrends

The US soybean market eased back from its highs as Chinese demand slowed again and good weather increased yield prospects. The USDA released a crop report which showed that the US soybean crop remains behind historical levels in terms of development but the condition of the crop is fairly good.

As a token of good faith China has granted exemptions of retaliatory import tariffs on U.S. soybeans. And at the same time China announced that seven Argentinian soybean crush plants have been approved for soymeal exports to China. But China is not expected in the Argentina market yet due to complex approvals for shipments and a lack of meal demand due to the ongoing African Swine Fever problems. This also demonstrates the long term potential impacts of the US/China trade war as China tries to diversify its sourcing and by doing so changes global trade flows.

Reports about the White House considering to increase biofuel quotas, to keep farm states happy, also supported soy oil prices. But after meeting with the “poor biofuel-supporting farm state” senators, and meeting with the “oil-rich state” senators whom try to discourage the Trump administration from pushing forward ethanol and biodiesel volumes, the president reportedly said that the biofuel/oil negotiations “were more difficult than dealing with the Taliban”. This again illustrates the need for biofuel demand to support agri-commodity prices and the interference of energy markets in agricultural markets.


Seed availability improves as harvesting progresses across Europe, Russia and Ukraine which is capping prices for now. Meanwhile the market seems to be well sold till the end of the year (almost sold out), so that not much harvest pressure is being expected (physical availability of new crop quantities weighing on price). Demand is expected to remain strong through the coming crop year with sun oil prices being competitive and the high premium for high oleic sunflower oil over classic sun remains strong.

EU rapeseed prices continue to rise, as the recent harvest came in at just over 17 million tons (-12.5% year on year), the lowest level in more than a decade. Lower prices are not expected in the mid-term future. The imports of Black Sea rapeseed seem to be giving the market a false sense of security, with supplies feeling heavy nearby but after New Year the situation can become very tight again, given the current availability of non-GM rapeseed. (and for the next harvest in 2020, EU planting reports point towards a sub 20 million ton crop). On September 24th  the price for crude rapeseed oil was a high $905.94/ton Fob Dutch Mill! 

Growing biodiesel demand drove up rapeseed oil prices: from October onwards, rapeseed methyl ester (RME), is the primary material blended into diesel fuel to ensure winter diesel quality (the fatty acid compo sition of rapeseed oil being better than soybean and palm oil). Usually demand for RME increases in September and the requirements for winter diesel apply to diesel all over northern Europe. On top of that, mineral oil companies, which are subject to meet the Green House Gas reduction quota, are required to meet such quota by the end of the calendar year and this is why they already started stocking up RME for the fourth quarter since mid-August, about a month earlier than in previous years.

Petroleum price on September 23rd 

Brent Price: $64.80 per barrel

Crude oil jumped nearly 20% in on Monday following the weekend drone attacks on Saudi Arabian oil refineries (September 14th). But prices weakened immediately and Saudi Arabian production returned to normal levels sooner than expected. Supply threats like the drone attacks and the recent catastrophic floods in Texas (affecting oil refining, petrochemical and export facilities) have supported crude oil prices on the short-term. But, high crude oil stocks in the US and global economic pessimism still outweigh all current bullish price factors.

US Dollar (USD)

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Unless otherwise mentioned the crude oil values quoted in these documents are prices landed in EU without import duties, handling, storage, financing, refining, packing, transport or any other cost related to bring the product to market. They are used as market trend illustration. Substitution of oils is possible but different oils have different fatty acid profiles and are not all interchangeable for all applications. One can make biodiesel from all oils and fats but one cannot make mayonnaise from coconut oil. This document is exclusively for you and does not carry any right of publication or disclosure. This document or any of its contents may not be distributed, reproduced, or used for any other purpose without the prior written consent of AVENO. The information reflects prevailing market conditions and our present judgement, which may be subject to change. It is based on public information and opinions which come from sources believed to be reliable; however, AVENO doesn’t guarantee the correctness or completeness. This document does not constitute an offer, invitation, or recommendation and may not be understood, as an advice. This document is one of a series of publications undertaken by AVENO and aims at informing broadly a targeted audience about the edible oils & fats market. AVENO’s goal is to keep this information timely and accurate however AVENO accepts no responsibility or liability whatsoever with regard to the given information.

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