Your biweekly update on edible oils & fats by Aveno.
Bi weekly dd July 21st 2025.
Predicting price.
Our markets for vegetable and animal oils and fats, as well as oilseeds, are becoming increasingly difficult to read. This is due, on the one hand, to an overload of information, and, on the other, to a lack of up-to-date, relevant and reliable data on supply, demand, stocks, trade flows, etc.To understand markets, it's best to carry out a market analysis. But an information overload and the growing vagueness often only fuels short-term price volatility. A long-term perspective, based on the study of the market’s specific “Supply and Demand” (S&D), or the “balance sheet”, can alleviate this problem somewhat.
Determining supply is a fairly straightforward matter. Stock levels at various locations, such as farms, public warehouses, traders, customers, etc., are an important element, because if production falls, large stocks can compensate for this, or vice versa. Total supply is always made up of the beginning stocks, plus what production brings to market.
Determining demand is much more complex. For example, in Western economies, food demand is relatively stable, definable and, to a large extent, inelastic. But since the advent of biofuels, the market has been trading energy, not food. And the market is trading a global S&D with many unknowns and surprises, which complicates matters still further.
In principle, supply and demand are balanced by price. Minor variations in supply or demand create an imbalance, and often a percentage difference in supply or demand will have an exponential effect on price. And as things can change daily, it's an ongoing process.
In addition, factors beyond our control influence price. Such as carbon regulations, deforestation regulations, geopolitics, inflation, economic instability, Trump, the evolution of global biofuel policies and so on.
Raw materials purchasing managers often have to make bold decisions with incomplete data in a constantly changing environment, without compromising annual profit or the company's existence. They don’t have crystal balls and they don't gamble, they manage risk. They know that no one has ever been impoverished by locking in a margin, but that those who have played the casino have often lost everything to the bank.
Edible oils & fats markets
Biofuels
The global biofuel situation is becoming increasingly complex, and predicting the changing trade flows, switches in raw materials, and price developments has become very risky.The increased blending mandate in Brazil and the forecasted higher demand from the US biodiesel industry will contribute to higher soybean oil prices, at least locally, but it is far from certain that soy oil prices will rise everywhere. It may also change the whole crush landscape: where in the world is the best crush margin to be made? In Argentina, EU, US….?
With the new US biofuel policies, there will be a shift in production. Biofuel production outside the US for export to the US will likely cease to exist, meaning less production in Asia, South America, and the EU for export. Or will it be diverted to flood the EU market, leading to a decline in domestic production? The US already exported HVO-diesel to the UK where biofuel producers are shutting down operations.
The increase in imports of UCO (used cooking oil) from China (less favored in the US) has already put a strain on the use of rapeseed oil for biodiesel production in the EU. And Indonesia, Malaysia, Thailand, etc., will continue to produce biodiesel from local palm oil.
Since palm oil-based biodiesel is less favored in the EU (also soy due deforestation risk), it is likely that more rapeseed oil will be used in the EU if the industry recovers from all the problems it has experienced in the last two years. However, RED III (Renewable Energy Directive targeting a share of 30% renewables in road fuels / incl. ethanol, electricity, gas…) and some Member States want to limit the use of food crops for biofuel production. And with Germany wanting to end the “double counting” for biofuels derived from waste-based feedstocks, they would need more biofuels to meet greenhouse gas reduction obligations, either from waste or other feedstock.
\Since the EU will use less palm oil for biofuels, it will inevitably be replaced by something else. This could (partly) be rapeseed oil. But policy is increasingly focusing on waste streams. Now also shipping and aviation is subject to greenhouse gas reduction targets, and only waste-based feedstocks will be allowed. Biogas also comes into play, as do “mass balance systems” (for the same molecules) and the accompanying certificate trading, making the entire system even more complex.
Farmer's wisdom says more demand leads to higher prices. But changes in raw material supply and the associated paperwork and risk will become more challenging; and it is impossible at this stage to predict the ultimate impact on global vegetable and animal oils and fats prices.
Palm Oil
Palm oil benefitted from strength of soybean oil futures on the Chicago Board of Trade but also from palm oil exports in June surging around 25% year-on-year, despite a 10.52% month-on-month decline and Malaysian end stocks in June reaching their highest level in 18 months.
With July production set to rise again and peak production fast approaching, prices will have to be more attractive to buyers as global demand remains uncertain. Big stocks in India and China raised concerns about short-term demand. And recently, the German UFOP pointed out that the EU-27 had imported around 20% less palm oil (700,000 mt) over the last twelve months compared to the period July 2023-June 2024, on a drop in palm-oil-based biodiesel production, after several member states withdrew palm-oil-based biofuels from eligibility for national quotas. This trend is likely to continue.
And then there's been Trump adding an extra layer of uncertainty to the dynamics of global trade by announcing to send letters, to 150 trade partners, that dictate what their new US tariff rate will be starting on August 1ˢᵗ…
Soybean oil
Beans
The biofuel policies in Brazil and the US have the potential to significantly increase the demand for soybean oil and thus increase the crushing of soybeans. But in the US farmers continued to deal with slumping soybean prices with new crop beans barely off the $10 line and $11 in their dreams. The weather has been good and some hot spots got timely rains but the near forecast is for hotter and drier weather as the crop approaches the most critical point of its growth cycle in August. Domestic bean demand is excellent, but going forward the questions around exports is leaving traders in doubt.
China is a major factor. China, one of the biggest US customers, was buying between 24 and 30Mmt of US soybeans/year, but is now slowly dropping off, switching to Brazil and that is likely to grow further in the future.
Trump’s tariff strategy is still giving more questions than answers to agricultural producers as not much has been settled yet. As for EU, the Commission said the EU is weighing potential retaliatory duties on US exports including several ag products after the President announced a 30% tariff last week, if a trade agreement wasn’t reached by August 1st. The EU still hopes to reach an agreement.
Trade discussions are putting pressure on commodity prices. There is still no deal with China, and other BRICS countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, United Arab Emirates) are being dragged into the discussion. Countermeasures from the BRICS include targeting US agricultural commodities. No deals probably means more volatility.
Oil
The oil side of the complex has been pretty firm with, in the US, almost 50% value share of the whole soybean. Which is remarkable as oil is about 20% of the bean. Most of this is on account of the projected significant growth for biomass-based diesel production in the US. On a global scale, the rise in soybean oil prices could however be limited by expected competition from increased production of palm and sunflower oil.
Meal
With higher soybean oil prices supporting crush margins and higher crush in 2025/26, soybean meal production is expected to grow, and meal prices (on the global market) are expected to remain low. This is not taking into account the implementation of EU's deforestation law and any tariffs resulting from trade tensions between EU and US. However, livestock numbers in the EU have already shrunk significantly due to EU regulations, and this will continue for some time. Demand for animal feed raw materials is declining, and there is an oversupply of certain streams, such as byproducts from the food industry. In short, there are fewer animals to feed and slaughter, resulting in less animal fat, lower feed prices, but higher meat prices. Revenue from meal sales is a significant component of the crush margin of oilseeds (soybean, rapeseed, sunflower, etc.), making it even more difficult to estimate the availability and price evolution of the oil component. To be complete the worldwide animal protein production is still growing, with poultry (big soybean meal consumer) in the lead.Rapeseed oil
Global rapeseed oil production for the 2025/26 season is estimated at about 31Mmt or roughly a 2% drop vs. 2024/25. But price direction remains fuzzy, a big sun oil production may cap price increases but the biodiesel demand may counterbalance that and get supportive. It is yet unclear how the biodiesel demand will evolve with the implementation of the RED III and the (global) shift in biodiesel feedstock demand.
Sunflower seed oil
As old crop stocks dwindle in the run-up to the new harvest, more attractive prices are expected from October onwards, as seed production may prove significantly better than last year. However, weather risks persist in most growing areas.The crop needs rain for further development as a dry and hot first half of July stressed the crop and some forecasters are already reviewing yields downward. The crop is at risk till it is made which translates in a weather risk premium, nervous steady supported markets and reluctant farmer selling.
On the oil side, the projected global sunflower oil production exceeds 23Mmt, up 10% vs. last season. And although new crop oil is getting under a bit of pressure at times, it is still trading at almost equal value to old crop and old crop Black Sea oil has been trading at levels more or less in line with the NW EU or 6 ports market. But oil markets have been quiet with buyers rather sidelining and awaiting the final outcome of the crop after the summer holidays. Sun oil is still at a big premium over South American soybean oil, making it less attractive on global markets. This is likely to change, especially for Black Sea oil, if the crop comes out all right.
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